Transfer program enforcement and children’s time allocation

Are We Having More Fun Yet?Categorizing and Evaluating Changes in Time Allocation Alan B. Krueger Are Americans spending their time in more or less enjoyable ways today than in earlier generations? The answer to this question is central for understanding economic and social progress yet has been elusive and controversial. From 1965-66 to 2005, for example, working-age American women increased the amount of time spent working for pay, watching television, and caring for adults while they reduced the amount of time spent cooking, cleaning, entertaining friends, and reading books. Do these shifts imply that women are better off or worse off? Gary Becker and Reuben Gronau provided the modern economic framework for modeling time allocation among market work, home production, and leisure.1 More recently, Valerie Ramey and Neville Francis, and Mark Aguiar and Erik Hurst, have made thorough attempts to apportion historical time-use data into these categories.2 These studies are controversial and reach conflicting conclusions, however, in part because external judgments were used to classify activities into home production, [End Page 193] leisure, and market work.3 Would the average person classify gardening, for example, as leisure or home production? Another problem is that it is unclear how to trade off shifts in time allocation across categories, or within them, when it comes to evaluating individuals' welfare. Not all leisure activities are equally enjoyable, nor are all home production tasks equally taxing. This paper provides two alternatives to the traditional work, home production, and leisure breakdown for evaluating welfare changes associated with trends in time allocation. The first method assigns activities to categories based on six dimensions of participants' reported affective experiences (feeling interested, stressed, happy, sad, pain, and tired) during various activities. The second makes use of the U-index, a measure of the percentage of time spent in an unpleasant state, defined as an episode in which the strongest emotion is a negative one. The U-index is computed for each of seventy-two activities in 2006, using an activity coding scheme that can be applied to historical time-use data (harmonized activities) and assigned to past data from 1965 to 2005 to summarize trends in time allocation. Both analyses make extensive use of the Princeton Affect and Time Survey (PATS), a national survey of time use and affective experience. The PATS, like other diary-based measures, probably yields a more accurate measure of affective experience than do questions about general enjoyment with particular activities.4 The methods presented here have three principal advantages over previous categorizations of time used by economists and sociologists. First, the categories are based on subjects' reported experiences, not researchers' judgments. Second, different types of leisure and home production activities are assigned to distinct categories if they are associated with different feelings and therefore represent distinct experiences. Third, the classification scheme is based on multiple aspects of affective [End Page 194] experience, not a unidimensional measure of enjoyment as in Thomas Juster's landmark study.5 The main substantive findings are that the share of time devoted to "mundane chores" such as ironing has decreased over the last four decades, while time spent on "neutral downtime" activities, such as watching television, has increased. On net, however, there have not been major shifts in time allocation toward more or less unpleasant activities for men and women combined. Men have experienced a gradual downward trend in the proportion of time spent in unpleasant activities as measured by the U-index; for women there is no detectable trend in the U-index despite significant changes in underlying time allocation. The next section describes the PATS data in more detail. The two sections that follow describe and implement a method for classifying activities into six distinct categories and then use these categories to summarize trends in time allocation since the mid-1960s. The penultimate section describes and implements the U-index method, and the paper concludes with a discussion of extensions and limitations of the analysis. The Princeton Affect and Time Survey The PATS is a new source of data on time use and affective experience. The survey questionnaire was designed by the author and administered by the Gallup Organization in...

A theoretical model is presented which integrates the consumption and production components of the rural household. A theoretically determined system of expenditure equations, derived factor demand equations and an off‐farm labor supply equation are estimated using primary data for Saskatchewan farm households. From the empirical results we conclude that if the wage rate can be observed or estimated, the farm household's behavior can be explained empirically in a manner consistent with received theory.Summary and ConclusionsA theoretical model integrating the consumption and production sides of the farm household or enterprise is estimated empirically using primary data for Saskatchewan farm households. The farm household was assumed to maximize its utility function subject to farm production and cash flow constraints. The empirical results indicate that the theoretical model can be estimated successfully even when data are sparse. While the coefficients for the expenditure, derived demand, and off‐farm labor supply equations are consistent with coefficients from similar equations estimated separately by others, the theoretically more precise integrated approach specifies the simultaneous effect of the variables across equations.From the empirical results and the theoretical considerations it is obvious that the wage rate is a key explanatory variable in the model. The wage rate links the three components of the model–final expenditures, the derived input demands and off‐farm labor hours. The wage rate is one determinant of the allocation of the operator's time (although other factors such as the nature of the operation and opportunities to work off‐farm dominated in this study), and both the wage rate and the allocation of the time determine the eventual income available to the rural household. In essence, then, the problem of explaining farm household behavior when the household's business enterprise function cannot be separated from its consumption activity is similar to that of traditional models based on the theory of the firm and models of consumer behavior. The only difference is that the wage rate is observable in the traditional models but needs to be estimated as a shadow price in models which seek to explain rural household behavior. As a result, research in this area must start with an explanation of the allocation of (at least) the operator's labor and a measure of the shadow wage rate. If the entire household's allocation of time between on‐farm and off‐farm labor and leisure is determined, it is possible to treat its consumption and production activities separately. Further research is required to extend the model to explain household labor supply to both the farm and off‐farm labor markets.

Home production and Social Security reform

The allocation of time by individuals and households is an important concern of economists. The author investigates time allocation to non-market work among urban women in Madras India estimating the derived demand for certain disaggregated measures of household work and child-care hours with the primary goal of examining the responsiveness of non-market time allocations to wages and income and to understand the role of education upon time allocations. The study also examined the exogeneity assumption upon children and hired help variables which are among the other covariates included in the time allocation functions. Findings are based upon data collected in a 1980-81 household survey of 244 working women and 422 women who did not participate in labor market work. The survey was restricted to nuclear households with or without dependents with married women aged 20-59 and with husband present and employed in the year preceding the survey. Data on non-market work were collected using the recall method. The study determined that women in Madras City spend a considerable amount of time in home production. It may be inferred that as a womans wage increases she will spend less time in home production by withdrawing time spent in teaching children. An increase in household assets leads to an increase in time spent teaching children at the expense of other non-market activities. Higher female education reduces the amount of time spent in all non-market activities except teaching the children. There is therefore an enormous relative reallocation of mothers time to childrens education.

Labor supply responses to tax changes are a core issue in public economics, reflected by numerous estimates from different methodological approaches. This dissertation contributes to the literature along two main avenues. First, I demonstrate how ex-ante simulations from a static discrete choice model can be validated ex-post by panel data methods estimating the elasticity of taxable earnings (Chapter 2). Second, I analyze the dynamics of labor supply responses to tax changes over time both with regards to panel data approaches (Chapter 3) and incorporated in a structural labor supply framework (Chapter 4). I use Norwegian register and survey data provided by Statistics Norway and focus on labor supply responses in working hours and wage earnings. In Chapter 2, I demonstrate how the standard elasticity of taxable income (ETI) methodology can be used to validate predictions from a structural labor supply model, by analyzing the Norwegian tax reform in 2006. To facilitate comparison, I use the discrete choice model to simulate the effects of the 2006 tax reform on hours of work, and use predicted income levels to obtain a comparable estimate for income elasticity with respect to the net-of-tax rate. In Chapter 3, I analyze the dynamics of earnings responses to tax changes by exploiting substantial exogenous variation in the two-tier surtax schedule for labor income over a period of 14 years (1995-2008). I adopt the dynamic panel data framework by Holmlund and Söderström (2011), and compare with estimates from the conventional static panel approach by Gruber and Saez (2002). I find that the long run responses to tax rate changes in labor supply are about twice as large as the short run responses due to a strong autoregressive effect in earnings. Supplementary conducted simulations suggest that up to 40 percent of the revenue loss due to tax rate cuts in the surtax schedule can be self- financed in the long run by inducing additional generated income. In Chapter 4, I examine the effect of state dependence to policy change responses over time within the framework of an intertemporal structural discrete choice model for women in couples. I allow for state dependence both in preferences and in the set of job opportunities. This causes sluggish labor supply responses to various changes in the wage rate and the tax schedule. Within the first year of a permanent policy change the simulation results suggest that about 50 percent of the full labor supply response can be expected, whereas 90 percent of the response is reached after about 4 years.

The traditional model of household labour supply incorporates leisure into preferences rather than focusing on how relative costs of production at home and via market activity determine market labour supply. In part, this reflects the lack of simple closed form solutions for the home production model. This article uses numerical techniques to compare the welfare costs of tax distortions of labour supply in models with and without home production. When observationally equivalent models of each type are calibrated to the same aggregate labour supply elasticity, the home production model of labour supply produces a much smaller welfare cost of tax distortions of labour supply than the standard model. Our results thus suggest that home production is important for understanding the welfare effects of labour tax policies.

The Allocation of Time in America 2003 and 2018

Effects of climate change on combined labour productivity and supply: an empirical, multi-model study

We use data from the American Time Use Survey (ATUS), covering both the recent recession and the pre-recessionary period, to explore how foregone market work hours are allocated to other activities over the business cycle. Given the short time series, it is hard to distinguish business cycle effects from low frequency trends by simply comparing time spent on a given category prior to the recession with time spent on that category during the recession. Instead, we identify the business cycle effects on time use using cross state variation with respect to the severity of the recessions. We find that roughly 30% to 40% of the foregone market work hours are allocated to increased home production. Additionally, 30% of the foregone hours are allocated to increased sleep time and increased television watching. Other leisure activities absorb 20% of the foregone market work hours. We use our evidence from the ATUS to calibrate and test the predictions of workhorse macroeconomic models with home production. We show that the quantitative implications of these models regarding the allocation of time over the business cycle matches reasonably well the actual behavior of households.

Traditional labor supply models grounded in the trade-off between labor and leisure are incomplete to the extent that they neglect time spent in home production: productive labor that is not exchanged in a market setting. Models that do incorporate home production typically predict a negative relationship with the wage rate, a relationship emphasized by most analyses of time devoted to home production during recessions. However, empirical studies of the behavior of home production over the business cycle find that home production is relatively acyclical. The prominence of the fall in house values during the Great Recession suggests an alternative driver of hours dedicated to home production: non-labor endowments and assets, specifically housing equity. This paper explores the role that changing house values play in determining time dedicated to home production using the American Time Use Survey. It concludes that on the margin, time allocation responds to changes in house values in the anticipated way only under certain conditions. Specifically, when non-owners are excluded from the analysis the anticipated results do not hold. Some suggestions to explain this result are provided, as well as a discussion of future clarifying research.

Tracking time-varying brand equity using household panel data

SummaryBased on linked administrative and survey panel data, we analyse the labour supply behaviour of physicians who could adopt either a standard fee‐for‐service contract or a mixed remuneration (MR) contract. Under MR, physicians received a per diem and a reduced fee for services provided. We present estimates of a structural discrete choice model that incorporates service intensity (services provided per hour) and contract choice into a labour supply framework. We use our estimates to predict (ex ante) the effects of contracts on physician behaviour and welfare, as measured by average equivalent variations. The supply of services is reduced under an MR contract, suggesting incentives matter. Hours spent seeing patients is less sensitive to incentives than the supply of services. Our results suggest that a reform forcing all physicians to adopt the MR system would have substantially larger effects on physician behaviour than were measured under the observed reform. A pure salary (per diem) reform would sharply reduce services but would increase time spent seeing patients.

This paper exploits the exogenous variation of Mexico’s Oportunidades conditional cash transfer program on urban households’ time and consumption allocations to identify and structurally estimate a collective labor supply model with home production. I use my structural estimates to show that participation in Oportunidades increased maternal intrahousehold bargaining power by almost 13%, which is associated with an increase of approximately 14% in the production of a child-related public good in dual-earner beneficiary households. Counterfactual exercises show that Oportunidades is as effective as alternative cash transfer programs and wage subsidies at increasing mothers’ bargaining power, control over household monetary resources, and domestic output.

This paper uses household panel data from rural Indonesia to examine the impact of road quality on labor supply and wages. First, road projects are found to increase transportation speed. Second, the empirical results from intra-village variations of household endowments and labor market behavior show that an increase in transportation speed raised wages in nonagricultural and agricultural employment, and was associated with a decline in working time in agricultural employment, for households whose members are relatively educated. The findings support potential complementarity between road quality and education.

This article explores the relationship between land size and productivity in the livestock sector. Household panel data from pastoral areas in northwestern China were analysed. Results suggest an inverse relationship (IR) between land size and the number of livestock per ha. IR can be largely explained by labour input intensity, which is negatively correlated with land size. We find that household’s labour demand is not separable from household’s labour supply and households’ decisions to rent land and hire labour for grazing are significantly related to the labour–land endowment ratio. These findings are consistent with the Chayanovian explanation that labour input intensity varies with farm size due to unobserved interhousehold variation in shadow wage rates. In addition, participation in the labour market does not significantly influence the IR for the employer, while the practice of land renting reduces, but does not eliminate, the IR for the lease. These findings point towards the potential for using factor markets to optimise pasture‐based livestock production scale, and the need to promote the factor market development to achieve efficiency in resource use.