Does Home Production Drive Structural Transformation?

Solmaz Moslehi (), Satoshi Tanaka and Alessio Moro

No 550, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: Using new home production data for the U.S., we estimate a model of structural transformation with a home production sector, allowing for both non-homotheticity of preferences and differential productivity growth in each sector. We report three main findings. First, the data support a specification with a different income elasticity of market and home services. Second, the non-homotheticity can account alone for the decline in the home services share, while price and income effects together are responsible for the rise of market services. Third, the slowdown in home labor productivity, started in the late 70s, is a key determinant of the late acceleration of the share of market services. We use the estimated model to run a counter-factual experiment and find that, by keeping the average growth rate of home labor productivity as before 1978, the model displays the consumption per capita of market services lowered by 26.1% in 2010.

Date: 2015
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Does Home Production Drive Structural Transformation? (2017)
Working Paper: Does home production drive structural transformation? (2016)
Working Paper: Does Home Production Drive Structural Transformation? (2015)
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