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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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    References listed on IDEAS

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    1. Marcet, Albert & Obiols-Homs, Francesc & Weil, Philippe, 2007. "Incomplete markets, labor supply and capital accumulation," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2621-2635, November.
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    9. Jeremy Lise & Ken Yamada, 2019. "Household Sharing and Commitment: Evidence from Panel Data on Individual Expenditures and Time Use," Review of Economic Studies, Oxford University Press, vol. 86(5), pages 2184-2219.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    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. Lei Fang & Anne Hannusch & Pedro Silos, 2020. "Bundling Time and Goods: Implications for Hours Dispersion," DETU Working Papers 2003, Department of Economics, Temple University.
    2. Yongsung Chang & Sun-Bin Kim & Kyooho Kwon & Richard Rogerson, 2019. "Cross-Sectional and Aggregate Labor Supply," ISER Discussion Paper 1063, Institute of Social and Economic Research, Osaka University.

    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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