Market Work, Home Production, Consumer Demand and Unemployment among the Unskilled

Melanie Lührmann () and Matthias Weiss
Authors registered in the RePEc Author Service: Melanie Lührmann

No 6101, MEA discussion paper series from Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy

Abstract: We propose and test a general equilibrium model in which longer working time and higher labor force participation lead to a fall in unemployment. Longer working hours and higher labor force participation have two direct effects: People have higher incomes and less (leisure) time. This has implications for the composition of consumer demand, since people spend less time on home production. Instead, they outsource more domestic tasks to the market. Consumer demand shifts toward unskill-intensive goods. The relative demand for unskilled labor rises and unemployment falls. We test our model in two ways: First, we study the link between labor market partici- pation, home production and the demand for household and similar services using the German time use survey conducted in 1991/92. Second, we use cross-country time- series data on OECD countries between 1980 and 2003 to directly examine the link between labor force participation and the unemployment rate. The empirical results corroborate the predictions from the theoretical model.

JEL-codes: E21 E24 J22 J23 (search for similar items in EconPapers)
Date: 2006-01-12
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://mea.mpisoc.mpg.de/uploads/user_mea_discussi ... 2p_MEA-DP-101-06.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mea:meawpa:06101

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in MEA discussion paper series from Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy, Amalienstraße 33, 80799 München, Germany.
Bibliographic data for series maintained by Henning Frankenberger ().