Econometrica: Sep 2021, Volume 89, Issue 5

Inferring Inequality with Home Production

https://doi.org/10.3982/ECTA15966
p. 2517-2556

Job Boerma, Loukas Karabarbounis

We revisit the causes, welfare consequences, and policy implications of the dispersion in households' labor market outcomes using a model with uninsurable risk, incomplete asset markets, and home production. Allowing households to be heterogeneous in both their disutility of home work and their home production efficiency, we find that home production amplifies welfare‐based differences, meaning that inequality in standards of living is larger than we thought. We infer significant home production efficiency differences across households because hours working at home do not covary with consumption and wages in the cross section of households. Heterogeneity in home production efficiency is essential for inequality, as home production would not amplify inequality if differences at home only reflected heterogeneity in disutility of work.



Log In To View Full Content

Supplemental Material

Supplement to "Inferring Inequality with Home Production"

This online appendix contains material not found within the manuscript.

Read More View PDF


Supplement to "Inferring Inequality with Home Production"

This zip file contains the replication files for the manuscript.

Read More View ZIP



Back