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Inferring Inequality with Home Production

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  • Job Boerma
  • Loukas Karabarbounis

Abstract

We revisit the causes, welfare consequences, and policy implications of the dispersion in households' labor market outcomes using a model with uninsurable risk, incomplete asset markets, and home production. Accounting for home production amplifies welfare-based differences across households meaning that inequality in standards of living is larger than we thought. Home production does not offset differences that originate in the market sector because hours working at home do not covary with consumption and wages in the cross section of households and there are significant production efficiency differences in the home sector. The optimal tax system should feature more progressivity taking into account home production.

Suggested Citation

  • Job Boerma & Loukas Karabarbounis, 2017. "Inferring Inequality with Home Production," NBER Working Papers 24166, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24166
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    1. Inferring Inequality with Home Production
      by Christian Zimmermann in NEP-DGE blog on 2018-01-11 22:56:22

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    Cited by:

    1. Chang, Yongsung & Kim, Sun-Bin & Kwon, Kyooho & Rogerson, Richard, 2020. "Cross-sectional and aggregate labor supply," European Economic Review, Elsevier, vol. 126(C).
    2. Boerma, Job & Karabarbounis, Loukas, 2020. "Labor market trends and the changing value of time," Journal of Economic Dynamics and Control, Elsevier, vol. 115(C).
    3. Bednar, William & Pretnar, Nick, 2020. "Home Production with Time to Consume," MPRA Paper 103730, University Library of Munich, Germany.
    4. Lei Fang & Anne Hannusch & Pedro Silos, 2020. "Bundling Time and Goods: Implications for Hours Dispersion," DETU Working Papers 2003, Department of Economics, Temple University.
    5. Bellmann, Lutz & Hübler, Olaf, 2020. "Job Satisfaction and Work-Life Balance: Differences between Homework and Work at the Workplace of the Company," IZA Discussion Papers 13504, Institute of Labor Economics (IZA).

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    More about this item

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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