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Household Labor Supply and Home Services in a General-Equilibrium Model with Heterogeneous Agents

  • Christian Bredemeier

    ()

  • Falko Jüßen

We propose a new explanation for differences and changes in labor supply by gender and marital status, and in particular for the increase in married women’s labor supply over time.We argue that this increase as well as the relative constancy of other groups’ hours are optimal reactions to outsourcing labor in home production becoming more attractive to households over time.To investigate this hypothesis,we incorporate heterogeneous agents into a household model of labor supply and allow agents to trade home labor. This model can generate the observed patterns in US labor supply by gender and marital status as a reaction to declining frictions on the market for home services.We provide an accounting exercise to highlight the role of alternative explanations for the rise in hours in a model where home labor is tradable.

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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0091.

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Length: 52 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:rwi:repape:0091
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  7. Oded Galor & David N. Weil, 1993. "The Gender Gap, Fertility, and Growth," NBER Working Papers 4550, National Bureau of Economic Research, Inc.
  8. Fernández, Raquel & Guner, Nezih & Knowles, John, 2001. "Love and Money: A Theoretical and Empirical Analysis of Household Sorting and Inequality," CEPR Discussion Papers 3040, C.E.P.R. Discussion Papers.
  9. Claudia Olivetti, 2005. "Changes in Women's Hours of Market Work: The Role of Returns to Experience," Boston University - Department of Economics - Macroeconomics Working Papers Series WP2005-008, Boston University - Department of Economics, revised Jun 2006.
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  18. Pierre-Andre Chiappori & Yoram Weiss, 2006. "Divorce, Remarriage, and Welfare: A General Equilibrium Approach," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 415-426, 04-05.
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  22. Raquel Fernández & Alessandra Fogli & Claudia Olivetti, 2004. "Mothers and Sons: Preference Formation and Female Labor Force Dynamics," The Quarterly Journal of Economics, Oxford University Press, vol. 119(4), pages 1249-1299.
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