Abstract
Traditional labor supply models grounded in the trade-off between labor and leisure are incomplete to the extent that they neglect time spent in home production: productive labor that is not exchanged in a market setting. Models that do incorporate home production typically predict a negative relationship with the wage rate, a relationship emphasized by most analyses of time devoted to home production during recessions. However, empirical studies of the behavior of home production over the business cycle find that home production is relatively acyclical. The prominence of the fall in house values during the Great Recession suggests an alternative driver of hours dedicated to home production: non-labor endowments and assets, specifically housing equity. This paper explores the role that changing house values play in determining time dedicated to home production using the American Time Use Survey. It concludes that on the margin, time allocation responds to changes in house values in the anticipated way only under certain conditions. Specifically, when non-owners are excluded from the analysis the anticipated results do not hold. Some suggestions to explain this result are provided, as well as a discussion of future clarifying research.
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Notes
To avoid confusion between “home production” as a non-market time use and “home production” as the building of new houses, I have followed the old adage that “love makes a house a home.” All references to “home” in this paper imply something about non-market time use. All references to “houses” refer to the buildings that house residents. Normally this distinction would be unnecessary in a study of home production and time use, but the joint discussion of home production and house values in this particular case introduced the possibility of confusion. The use of “household” to describe the statistical or unit of analysis (e.g., “household members” or “household budget constraint”) is preserved.
Hersch’s (2009) interest was in sex discrimination lawsuits, so wage rates entered her regressions as the dependent variable. This was in contrast to traditional theorization of the time allocation problem, which takes wage rates offered in the market as exogenous and assumes that workers allocate time to home production and market work on the basis of the wage rate. However, there is no need to treat Hersch’s (2009) specification as unidirectionally causal. The results still corroborate NHE models.
I thank an anonymous reviewer for the suggestion of excluding non-owners.
The ATUS also collects information on whether respondents were supervising children while engaging in other activities (such as house production). These supervisory activities explain the relatively low amount of time dedicated to child care. These figures area also reduced because not all respondents have young children to care for.
I thank an anonymous reviewer for both suggestions.
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Acknowledgments
I would like thank Susan Fleck, Robert Lerman, Phanwin Yokying, Kathleen Kuehn, and three anonymous reviewers for helpful comments on the paper.
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Kuehn, D. Home Production, House Values, and the Great Recession. J Fam Econ Iss 37, 99–114 (2016). https://doi.org/10.1007/s10834-015-9438-3
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DOI: https://doi.org/10.1007/s10834-015-9438-3