Working Paper: NBER ID: w19178
Authors: Robert A. Pollak
Abstract: When does efficiency in the household imply specialization? For example, if we recognize two sectors, "market" and "household," when does efficiency imply that one spouse specializes in the market and the other in the household? If efficiency did imply specialization, then egalitarian marriages would be inefficient and an equity-efficiency tradeoff inescapable. This paper clarifies the roles that household technology and human capital play in reaching conclusions about specialization.\n\nThe critical assumption that leads to the specialization conclusion in Becker's Treatise on the Family is that spouses' time inputs are perfect substitutes in household production. With no further assumptions (other than efficiency and the absence of process preferences) perfect substitutes imply specialization. Although some of Becker's proofs appear to rely on households optimally adjusting spouses' stocks of market and household human capital, the specialization conclusion does not: with perfect substitutes, efficiency implies specialization even when each spouse's stocks of human capital are fixed, regardless of the levels at which they are fixed. Other assumptions about household technology also imply the specialization conclusion. I prove that (again in the absence of process preferences) if the household technology is "additive" and exhibits constant returns to scale, then efficiency implies specialization.\n
Keywords: No keywords provided
JEL Codes: D13; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| spouses' time inputs are perfect substitutes in household production (D13) | efficiency implies specialization (D61) |
| household technology is additive and exhibits constant returns to scale (D13) | efficiency implies specialization (D61) |
| decreasing returns to scale (D24) | efficiency does not necessitate specialization (F12) |