Working Paper: NBER ID: w24263
Authors: Richard Rogerson; Johanna Wallenius
Abstract: Using the Consumption Activities Mail Survey (CAMS) module in the HRS we document how time allocations change for individuals within a household when one or more members transitions from full time work to not working. Our basic finding is that the ratio of home production to leisure time is approximately constant for both family members. We then build a model of household labor supply to understand the implications of this finding for preferences and the home production function. We conclude that this fact suggests a relatively large elasticity of substitution between the leisure of the two members. For commonly used preference specifications, this also implies a large (i.e., greater than one) intertemporal elasticity of substitution for leisure.
Keywords: household time use; labor supply; elasticity of substitution; retirement
JEL Codes: E24; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| household time allocation (D13) | labor supply parameters (J20) |
| transition from full-time work to retirement (J26) | ratio of home production to leisure time (D13) |
| ratio of home production to leisure time (D13) | elasticity of substitution between leisure of two members (J22) |
| elasticity of substitution between leisure of two members (J22) | elasticity of substitution between home production and leisure (D13) |
| household time allocations do not change (D13) | elasticity parameters must be equal (C20) |
| elasticity of substitution between leisure times is robust (J22) | lower bound of unity for leisure elasticity parameter (D11) |
| findings imply large intertemporal elasticity of substitution for leisure (D15) | size of home production elasticity (D12) |
| patterns observed in U.S. data (C80) | consistency across other countries (F55) |