Home Production with Time to Consume
William Bednar and
MPRA Paper from University Library of Munich, Germany
We construct a general equilibrium model with home production where consumers choose how to spend their off-market time using market consumption purchases. The time-intensities and productivities of different home production activities determine the degree to which variation in income and relative market prices affects both the composition of expenditure and market labor hours per worker. When accounting for time to consume, homothetic utility functions can still generate non-linear expansion paths as wages increase. For the United States substitution effects due to relative price changes dominate income effects from wage growth in contributing to the rise in the services share and the fall in hours per worker. Quality improvements to goods and services have roughly kept pace with each other, so that changes to sectoral produc- tion efficiencies are the primary driver of relative price variation.
Keywords: household production; labor-leisure; time use; aggregate consumption; structural change; technical change; services; goods (search for similar items in EconPapers)
JEL-codes: D13 E2 O3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-upt
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