Concepedia

Leisure, Home Production, and Work--the Theory of the Allocation of Time Revisited

Journal of Political Economy · 1977 · 825 citations · 8 references

TL;DR

Higher market wages are predicted to cut home work, while their impact on leisure and market work is unclear; increased income raises leisure, lowers market work, and leaves home work unchanged. The study formalizes the trichotomy of market work, home work, and leisure, and explores implications for labor supply, fertility, marriage gains, child‑care demand, and home‑output measurement. Home production is modeled as time used to produce perfect‑substitute goods with diminishing marginal productivity, and the analysis extends to related labor‑supply and demographic outcomes. Empirical tests using Michigan Income Dynamics data and prior time‑budget studies confirm these theoretical predictions.

Abstract

The paper tries to formalize the trichotomy of work in the market, work at home, and leisure. Time is used at home to produce home goods that are perfect substitutes for market goods, where home production is subject to diminishing marginal productivity. An increase in the market wage rate is expected to reduce work at home, while its effect on leisure and work in the market is indeterminate. An increase in income increases leisure, reduces work in the market, and leaves work at home unchanged. These conclusions are supported by empirical tests based on the Michigan Income Dynamics data, as well as by previous time budget studies. Further implications for labor supply, fertility, gain from marriage, demand for child care, and the measurement of home output are investigated.