The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Household Production and Public Goods

  • Reuben Gronau
Reference work entry


Home production constitutes even in modern economies about one-third of GNP. The article discusses Becker’s theory of home production and its critiques. It develops a general model where welfare is a function of market and home goods, market work, work-at-home and leisure, focusing on problems of its identification arising from the fact that home output is not traded in the market. These problems are aggravated in the multi-person household framework, since intra-household allocation is unobserved. These difficulties have serious ramifications for the measurement of adult equivalent scales, productivity at home and home output.


Barten method Barten, A. Becker’s household production model Children Equivalence scales Family Fertility Home goods vs. market goods Household production and public goods Intra-household distribution Kuznets, S. Leisure Marginal productivity Psychic income Real business cycles Schooling Shadow prices Time use Value of time Women’s work and wages 

JEL Classifications

This is a preview of subscription content, log in to check access.


  1. Barten, A. 1964. Family composition, prices and expenditure patterns. In Econometric analysis for national economic planning, ed. P. Hart, G. Mills, and J. Whitaker. London: Butterworth.Google Scholar
  2. Becker, G. 1965. A theory of the allocation of time. Economic Journal 75: 493–517.CrossRefGoogle Scholar
  3. Becker, G. 1988. Family economics and macro behavior. American Economic Review 78: 1–13.Google Scholar
  4. Becker, G., and H. Lewis. 1973. On the interaction between quantity and quality of children. Journal of Political Economy 81: S279–S288.CrossRefGoogle Scholar
  5. Benhabib, J., R. Rogerson, and R. Wright. 1991. Homework in macroeconomics: Household production and aggregate fluctuations. Journal of Political Economy 99: 1166–1187.CrossRefGoogle Scholar
  6. Cooley, T. (ed.). 1995. Frontiers of business cycle research. Princeton: Princeton University Press.Google Scholar
  7. Graham, J., and C. Green. 1984. Estimating the parameters of the household production function with joint products. The Review of Economics and Statistics 66: 277–282.CrossRefGoogle Scholar
  8. Greenwood, J., and Z. Hercowitz. 1991. The allocation of capital and time over the business cycle. Journal of Political Economy 99: 1188–1214.CrossRefGoogle Scholar
  9. Gronau, R. 1970. The effect of traveling time on the demand for passenger transportation. Journal of Political Economy 78: 377–394.CrossRefGoogle Scholar
  10. Gronau, R. 1973. The effect of children on the housewife’s value of time. Journal of Political Economy 81(Part II): S168–S199.CrossRefGoogle Scholar
  11. Gronau, R. 1977. Leisure, home production, and work-the theory of the allocation of time revisited. Journal of Political Economy 85: 1099–1123.CrossRefGoogle Scholar
  12. Gronau, R. 1980. Home production: A forgotten industry. The Review of Economics and Statistics 62: 408–416.CrossRefGoogle Scholar
  13. Gronau, R. 1988. Consumption technology and the intrafamily distribution of resources: Adult equivalence scales reexamined. Journal of Political Economy 96: 1183–1205.CrossRefGoogle Scholar
  14. Gronau, R., and D. Hamermesh. 2001. The demand for variety: A household production perspective, Working paper, vol. 8509. Cambridge, MA: NBER.CrossRefGoogle Scholar
  15. Grossman, M. 1972. The demand for health: A theoretical and empirical investigation, Occasional paper, vol. 119. New York: NBER.Google Scholar
  16. Hawrylyshyn, O. 1976. The value of household services: A survey of empirical estimates. Review of Income and Wealth 22: 101–131.CrossRefGoogle Scholar
  17. Kerkhofs, M., and P. Kooreman. 2003. Identification and estimation of a class of household production models. Journal of Applied Econometrics 18: 337–369.CrossRefGoogle Scholar
  18. Kuznets, S. 1944. National income and its composition, vol. 2. New York: NBER.Google Scholar
  19. Michael, R. 1973. Education in non-market production. Journal of Political Economy 81(Part I): 306–327.CrossRefGoogle Scholar
  20. Mincer, J. 1962. Labor force participation of married women: A study of labor supply. In Aspects of labor economics, ed. H. Lewis. Princeton: Princeton University Press.Google Scholar
  21. Mincer, J. 1963. Market prices, opportunity costs, and income effects. In Measurement in economics, ed. C. Christ. Stanford: Stanford University Press.Google Scholar
  22. Pollak, R., and M. Wachter. 1975. The relevance of the household production function and its implications for the allocation of time. Journal of Political Economy 83: 255–278.CrossRefGoogle Scholar
  23. Rupert, P., R. Rogerson, and R. Wright. 1995. Estimating substitution elasticities in household production models. Economic Theory 6: 179–193.CrossRefGoogle Scholar
  24. Van Praag, B., and M. Warnaar. 1997. The cost of children and the use of demographic variables in consumer demand. In Handbook of population and family economics, vol. 1A, ed. M. Rosenzweig and O. Stark. Amsterdam: North-Holland.Google Scholar
  25. Willis, R. 1973. A new approach to the theory of fertility behavior. Journal of Political Economy 81: S14–S64.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Reuben Gronau
    • 1
  1. 1.