Revisiting the Role of Home Production in Life-Cycle Labor Supply

Jason Faberman ()

No WP-2015-2, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: This paper examines the role of home production in estimating life-cycle labor supply. I show that, consistent with previous studies, ignoring an individual?s time spent on home production when estimating the Frisch elasticity of labor supply biases its estimate downwards. I also show, however, that ignoring other ways a household can satisfy the demand for home production biases its estimate upwards. Changes in this demand over the life-cycle have an income effect on labor supply, but the effect can be mitigated through purchases in the market and through the home production of other household members. When accounting all factors related to home production, I find that the \"micro\" Frisch elasticity is about 0.4 and the \"macro\" Frisch elasticity, which accounts for extensive margin adjustments, is about 0.9. If I only account for an individual's own home production effort, I find that the \"macro\" elasticity is about 1.6.

Keywords: Labor; Home production; Frisch elasticity of labor supply; life-cycle time use (search for similar items in EconPapers)
JEL-codes: D13 D91 J22 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2015-05-03
New Economics Papers: this item is included in nep-dge and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Revisiting the role of home production in life-cycle labor supply (2010)
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