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The Time and Timing Costs of Market Work

  • Daniel S. Hamermesh
  • Stephen Donald

With the American Time Use Survey of 2003 and 2004 we first examine whether additional market work has neutral impacts on the mix of non-market activities. The estimates indicate that fixed time costs of market work alter patterns of non-market activities, reducing leisure time and mostly increasing time devoted to household production. Similar results are found using time-diary data for Australia, Germany and the Netherlands. Direct estimates of the utility derived from goods consumption and two types of non-market time in the presence of these fixed costs indicate that they generate a utility-equivalent of as much as 8 percent of income that must be overcome before market work becomes an optimizing choice. Market work also alters the timing of a fixed amount of non-market activities during the day, away from the schedule chosen when market work imposes no timing constraints. All of these effects are mitigated by higher family income. The results provide a new supply-side explanation for the frequently observed discrete drop from full-time work to complete retirement.

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File URL: http://www.nber.org/papers/w13127.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13127.

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Date of creation: May 2007
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Publication status: published as "A Structural Model of the Fixed Time Costs of Market Work" Donald, Stephen G.; Hamermesh, Daniel S.; Economics Letters, September 2009, v. 104, iss. 3, pp. 125-28
Handle: RePEc:nbr:nberwo:13127
Note: AG LS PE
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  1. Richard Blundell & Thomas MaCurdy, 1998. "Labour supply: a review of alternative approaches," IFS Working Papers W98/18, Institute for Fiscal Studies.
  2. Mikal Skuterud, 2007. "Identifying the Potential of Work-Sharing as a Job-Creation Strategy," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 265-287.
  3. Gronau, Reuben, 1980. "Home Production-A Forgotten Industry," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 408-16, August.
  4. Robert M. Hutchens & Karen Grace-Martin, 2006. "Employer willingness to permit phased retirement: Why are some more willing than others?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 59(4), pages 525-546, July.
  5. Burda, Michael C. & Hamermesh, Daniel S. & Weil, Philippe, 2006. "The Distribution of Total Work in the EU and US," IZA Discussion Papers 2270, Institute for the Study of Labor (IZA).
  6. Mark Aguiar & Erik Hurst, 2006. "Measuring trends in leisure: the allocation of time over five decades," Working Papers 06-2, Federal Reserve Bank of Boston.
  7. Robert Hutchens & Karen Grace-Martin, 2006. "Employer Willingness to Permit Phased Retirement: Why are Some More Willing Than others?," ILR Review, Cornell University, ILR School, vol. 59(4), pages 525-546, July.
  8. Jess Benhabib & Richard Rogerson & Randall Wright, 1991. "Homework in macroeconomics: household production and aggregate fluctuations," Staff Report 135, Federal Reserve Bank of Minneapolis.
  9. Jeff E. Biddle & Daniel S. Hamermesh, 1989. "Sleep and the Allocation of Time," NBER Working Papers 2988, National Bureau of Economic Research, Inc.
  10. Richard B. Freeman & Ronald Schettkat, 2005. "Marketization of household production and the EU–US gap in work," Economic Policy, CEPR;CES;MSH, vol. 20(41), pages 6-50, 01.
  11. Hamermesh, Daniel S, 1999. "The Timing of Work over Time," Economic Journal, Royal Economic Society, vol. 109(452), pages 37-66, January.
  12. Alan L. Gustman & Thomas L. Steinmeier, 2004. "Minimum Hours Constraints, Job Requirements and Retirement," NBER Working Papers 10876, National Bureau of Economic Research, Inc.
  13. Cogan, John F, 1981. "Fixed Costs and Labor Supply," Econometrica, Econometric Society, vol. 49(4), pages 945-63, June.
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