Full price elasticities and the value of time: A tribute to the Beckerian model of the allocation of time

François Gardes ()
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François Gardes: Centre d'Economie de la Sorbonne - Paris School of Economics, https://centredeconomiesorbonne.univ-paris1.fr

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: This article adopts Becker's allocation of time framework to describe households' choices concerning both their monetary and time use expenditures in order to propose a new method to derive price elasticity at a micro level. Price and full income elasticities are estimated on a matching of a French Family Budget and a Time Use survey. The utility and home production functions are specified in order to allow the computation of the household's opportunity cost for time, which is shown to be smaller in average than the household's wage net of taxes. This estimate serves to value time dedicated to domestic activities and are used in the definition of full prices. The estimated price elasticities compare well with the estimates by other methods, such as Frisch's model based on independence of preferences assumptions or Hicks-Lewbel's method based on the aggregation of commodities. Finally, the model is applied to the computation of a welfare index, to the estimation of the household's labour supply and to a tentative explanation of the classic difference between cross-section and time-series estimates of income elasticities

Keywords: Allocation of time; domestic production; full income; full price; opportunity cost for time; price elasticity (search for similar items in EconPapers)
JEL-codes: C33 D1 D13 J22 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2014-02
New Economics Papers: this item is included in nep-lab
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Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:14014

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