Detecting household production
Baxter, Marianne
The economics of household choice has occupied an important position in both microeconomics
and macroeconomics since Becker’s (1965) pioneering work. Yet our empirical understanding
of the household sector is hampered by the absence of measurement of this sector’s output. Our
paper contributes to our knowledge of the extent of home/market substitutions by utilizing
detailed expenditure data provided by the Consumer Expenditure Survey (CEX). We compare
expenditures by married, 1-earner households to expenditures by married, 2-earner households.
Single-earner households have more non-market time that maybe be spent in home production or
leisure. We detect the presence of several home/market substitutions across family types that are
consistent with the theory.
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