Household Labor Supply and Home Services in a General-Equilibrium Model with Heterogeneous Agents

41 Pages Posted: 19 Jan 2009

See all articles by Christian Bredemeier

Christian Bredemeier

University of Dortmund - Ruhr Graduate School in Economics

Falko Juessen

University of Dortmund - Department of Economics; IZA Institute of Labor Economics

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Abstract

We propose a new explanation for differences and changes in labor supply by gender and marital status, and in particular for the increase in married women's labor supply over time. We argue that this increase as well as the relative constancy of other groups' hours are optimal reactions to outsourcing labor in home production becoming more attractive to households over time. To investigate this hypothesis, we incorporate heterogeneous agents into a household model of labor supply and allow agents to trade home labor. This model can generate the observed patterns in US labor supply by gender and marital status as a reaction to declining frictions on the market for home services. We provide an accounting exercise to highlight the role of alternative explanations for the rise in hours in a model where home labor is tradable.

Keywords: labor supply, gender, home production, heterogeneity

JEL Classification: J22, J16, E13, D13

Suggested Citation

Bredemeier, Christian and Juessen, Falko, Household Labor Supply and Home Services in a General-Equilibrium Model with Heterogeneous Agents. IZA Discussion Paper No. 3944, Available at SSRN: https://ssrn.com/abstract=1329582 or http://dx.doi.org/10.2139/ssrn.1329582

Christian Bredemeier (Contact Author)

University of Dortmund - Ruhr Graduate School in Economics ( email )

Hohenzollernstr. 1-3
Essen, NRW 45128
Germany

Falko Juessen

University of Dortmund - Department of Economics ( email )

D-44221 Dortmund
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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