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A Gift of Time

  • Kawaguchi, Daiji

    ()

    (RIETI, Hitotsubashi University)

  • Lee, Jungmin

    ()

    (Sogang University)

  • Hamermesh, Daniel S.

    ()

    (Royal Holloway; University of Texas at Austin)

How would people spend time if confronted by permanent declines in market work? We identify preferences off exogenous cuts in legislated standard hours that raised employers' overtime costs in Japan around 1990 and Korea in the early 2000s. Using time-diaries from before and after these shocks, we estimate the probability that an individual would have been affected by the reform. Reduced-form estimates show that the direct effect on a newly-constrained worker was a substantial reduction in market time, with the free-up time in Japan reallocated to leisure and personal maintenance, while in Korea the results are mixed, showing some impact on household production. Simulations using GMM estimates of a Stone-Geary utility function defined over time use suggest no effect on household production in either country. Estimation of a household model shows only slight evidence that spouses shared the time gift, nor that one spouse's allocation of non-market time changed when the other spouse's market work was permanently and exogenously reduced.

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File URL: http://ftp.iza.org/dp6700.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6700.

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Length: 40 pages
Date of creation: Jul 2012
Date of revision:
Publication status: published in: Labour Economics, 2013, 24, 205-216
Handle: RePEc:iza:izadps:dp6700
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  1. Jungmin Lee & Daiji Kawaguchi & Daniel S. Hamermesh, 2011. "Aggregate Impacts of a Gift of Time," NBER Working Papers 17649, National Bureau of Economic Research, Inc.
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