Advertisement

Journal of Family and Economic Issues

, Volume 37, Issue 1, pp 99–114 | Cite as

Home Production, House Values, and the Great Recession

  • Daniel KuehnEmail author
Original Paper

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.

Keywords

Home production Time use Business cycle Housing market 

JEL Classification

D13 E32 J22 

Notes

Acknowledgments

I would like thank Susan Fleck, Robert Lerman, Phanwin Yokying, Kathleen Kuehn, and three anonymous reviewers for helpful comments on the paper.

References

  1. Aguiar, M., Hurst, E., & Karabarbounis, L. (2013). Time use during recessions. American Economic Review, 103(5), 1664–1696. doi: 10.1257/aer.103.5.1664.CrossRefGoogle Scholar
  2. Artis, J., & Pavalko, E. (2003). Explaining the decline in women’s household labor: Individual change and cohort differences. Journal of Marriage and the Family, 65(3), 746–761. doi: 10.1111/j.1741-3737.2003.00746.x.CrossRefGoogle Scholar
  3. Baral, R., Davis, G., & You, W. (2011). Consumption time in household production: Implications for the goods-time elasticity of substitution. Economic Letters, 112(2), 138–140. doi: 10.1016/j.econlet.2011.03.005.CrossRefGoogle Scholar
  4. Becker, G. (1965). A theory of the allocation of time. Economic Journal, 75(299), 493–515. doi: 10.2307/2228949.CrossRefGoogle Scholar
  5. Benhabib, J., Rogerson, R., & Wright, R. (1991). Homework in macroeconomics: Household production and aggregate fluctuations. Journal of Political Economy, 99, 1166–1187. doi: 10.1086/261796.CrossRefGoogle Scholar
  6. Bridgman, B., Dugan, A., Lal M., Osborne, M., & Villones, S. (2012). Accounting for household production in the national accounts, 1965-2010. Survey of Current Business, 92(5), 23–36. Retrieved from: www.bea.gov/scb/pdf/2012/05%20May/0512_household.pdf.
  7. Burda, M., & Hamermesh, D. (2010). Unemployment, market work, and household production. Economic Letters, 107, 131–133. doi: 10.1016/j.econlet.2010.01.004.CrossRefGoogle Scholar
  8. Chiswick, B. (2006). In memoriam: Jacob Mincer (1922-2006). IZA: Bonn, Germany. Retrieved from: http://www.iza.org/en/webcontent/news/mincer.
  9. Choi, H. (2011). Parents’ health and adult children’s subsequent working status: A perspective of intergenerational transfer and time allocation. Journal of Family and Economic Issues, 32, 493–507. doi: 10.1007/s10834-010-9240-1.CrossRefGoogle Scholar
  10. Connelly, R., & Kimmel, J. (2009). Spousal influences on parents’ non-market time use. Review of Economics of the Household, 7, 361–394. doi: 10.1007/s11150-009-9060-y.CrossRefGoogle Scholar
  11. Folbre, N. (2004). A Theory of the misallocation of time. In M. Bittman and N. Folbre (ed.), Family Time: The Social Organization of Care, p. 7-24.Google Scholar
  12. Gallaway, L., & Vedder, R. (2003). Ideas versus ideology: The origins of modern labor economics. Journal of Labor Research, 24(4), 643–668. doi: 10.1007/s12122-003-1018-x.CrossRefGoogle Scholar
  13. Gimenez-Nadal, J., Marcen, M., & Ortega, R. (2012). Substitution and presence effects of children on mothers’ adult care time. Journal of Family and Economic Issues, 32, 2–10. doi: 10.1007/s10834-011-9250-7.CrossRefGoogle Scholar
  14. Gough, M., & Killewald, A. (2011). Unemployment in families: The case of housework. Journal of Marriage and the Family, 73(5), 1085–1100. doi: 10.1111/j.1741-3737.2011.00867.x.CrossRefGoogle Scholar
  15. Greenwood, J., & Hercowitz, Z. (1991). The allocation of capital and time over the business cycle. Journal of Political Economy, 99, 1188–1214. doi: 10.1086/261797.CrossRefGoogle Scholar
  16. Gronau, R. (1973). The intrafamily allocation of time: The value of housewives’ time. American Economic Review, 63, 643–651. Retrieved from www.jstor.org/stable/1808854.
  17. Grossbard-Shechtman, S. (2001). The new home economics at Colombia and Chicago. Feminist Economics, 7(3), 103–130. doi: 10.1080/13545700110111136.CrossRefGoogle Scholar
  18. Hammermesh, S. (2007). Time to eat: Household production under increasing income inequality. American Journal of Agricultural Economics, 89(4), 852–863. doi: 10.1111/j.1467-8276.2007.01012.x.CrossRefGoogle Scholar
  19. Hammermesh, D. (2008). Direct estimates of household production. Economic Letters, 98(2008), 31–34. doi: 10.1016/j.econlet.2007.03.008.CrossRefGoogle Scholar
  20. Hersch, J. (2009). Home production and wages: Evidence from the American time use survey. Review of Economics of the Household, 7, 159. doi: 10.1007/s11150-009-9051-z.CrossRefGoogle Scholar
  21. Ingram, B., Kocherlakota, N., & Savin, N. (1997). Using theory for measurement: An analysis of the cyclical behavior of home production. Journal of Monetary Economics, 40, 435–456. doi: 10.1016/S0304-3932(97)00058-5.CrossRefGoogle Scholar
  22. Kimmel, J., & Connelly, R. (2007). Mothers’ time choices: Caregiving, leisure, home production, and paid work. Journal of Human Resources, 42(3), 643–681. Retrieved from www.jstor.org/stable/40057322.
  23. Mincer, J. (1963). Market prices, opportunity costs, and income effects. In C. Christ (Ed.), Measurement in economics (pp. 36–52). Stanford, CA: Stanford University Press.Google Scholar
  24. Moro-Egido, A. (2012). Changing trends of mothers’ active and passive childcare times. Journal of Family and Economic Issues, 3, 11–23. doi: 10.1007/s10834-011-9265-0.CrossRefGoogle Scholar
  25. Mroz, T. (1987). The sensitivity of an empirical model of married women’s hours of work to economic and statistical assumptions. Econometrica, 55(4), 765–799. doi: 10.2307/1911029.CrossRefGoogle Scholar
  26. Nosal, E., Rogerson, R., & Wright, R. (1992). The role of household production in models of involuntary unemployment and underemployment. The Canadian Journal of Economics, 25(3), 507–520. doi: 10.2307/135729.CrossRefGoogle Scholar
  27. Ramey, V. (2009). Time spent in home production in the twentieth-century United States: New estimates from old data. Journal of Economic History, 69(1), 1–47. doi: 10.1017/S0022050709000333.CrossRefGoogle Scholar
  28. Stadler, G. (1994). Real business cycles. Journal of Economic Literature, 32(4), 1750–1783. Retireved from www.jstor.org/stable/pdfplus/2728793.pdf.
  29. Stancanelli, E., & van Soest, A. (2012). Retirement and home production: A regression discontinuity approach. American Economic Review: Papers and Proceedings, 102(3), 600–605. doi: 10.1257/aer.102.3.600.CrossRefGoogle Scholar
  30. Von Gameren, E. (2013). The role of economic incentives and attitudes in participation and childcare decisions. Journal of Family and Economic Issues, 34, 296–313. doi: 10.1007/s10834-012-9332-1.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.Urban Institute, Income and Benefits Policy CenterWashingtonUSA
  2. 2.American University Department of EconomicsWashingtonUSA

Personalised recommendations