Inferring Inequality with Home Production

Loukas Karabarbounis and Job Boerma

No 13554, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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. Allowing households to be heterogeneous in both their disutility of home work and their home production efficiency, we find that home production amplifies welfare-based differences meaning that inequality in standards of living is larger than we thought. We infer significant home production efficiency differences across households because hours working at home do not covary with consumption and wages in the cross section of households. Heterogeneity in home production efficiency is essential for inequality, as home production would not amplify inequality if differences at home only reflected heterogeneity in disutility of work.

Keywords: Home production; Labor supply; Consumption; Inequality (search for similar items in EconPapers)
JEL-codes: D10 D60 E21 J22 (search for similar items in EconPapers)
Date: 2019-02
New Economics Papers: this item is included in nep-dem, nep-dge, nep-ias, nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Inferring Inequality with Home Production (2018)
Working Paper: Inferring Inequality with Home Production (2017)
Working Paper: Inferring Inequality with Home Production (2017)
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