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The impact of home production on economic inequality in Germany

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  • Joachim Frick
  • Markus Grabka
  • Olaf Groh-Samberg

Abstract

Using representative income and time-use data from the German Socio-Economic Panel, we estimate non-monetary income advantages arising from home production and analyze their impact on economic inequality. As an alternative to existing measures, we propose a predicted wage approach that relaxes some of the strong assumptions underlying both the standard opportunity cost approach and the housekeeper wage approach. We also propose a method of adjusting the number of hours spent on home production to reduce the bias arising from multi-tasking and joint production in time-use data. Sensitivity analyses comparing results among different approaches provide indications of method effects. Although this study supports the evidence that considering home production leads to a reduction in inequality, we show that the size of this effect differs according to the variations in the mean and distribution of the estimated monetary value of home production across the three approaches. This finding underscores the need for a harmonized approach in cross-national comparative research. Copyright Springer-Verlag 2012

Suggested Citation

  • Joachim Frick & Markus Grabka & Olaf Groh-Samberg, 2012. "The impact of home production on economic inequality in Germany," Empirical Economics, Springer, vol. 43(3), pages 1143-1169, December.
    • Handle: RePEc:spr:empeco:v:43:y:2012:i:3:p:1143-1169
    DOI: 10.1007/s00181-011-0523-7
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    Cited by:

    1. Jim Been & Susann Rohwedder & Michael Hurd, 2020. "Does Home Production Replace Consumption Spending? Evidence from Shocks in Housing Wealth in the Great Recession," The Review of Economics and Statistics, MIT Press, vol. 102(1), pages 113-128, March.
    2. Andrea Brandolini & Eliana Viviano, 2014. "Accounting for total work," Questioni di Economia e Finanza (Occasional Papers) 253, Bank of Italy, Economic Research and International Relations Area.
    3. Stockhausen, Maximilian, 2016. "The Impact of Private and Public Childcare Provision on the Distribution of Children's Incomes in Germany," VfS Annual Conference 2016 (Augsburg): Demographic Change 145638, Verein für Socialpolitik / German Economic Association.
    4. François Gardes, 2021. "A Solution to the Estimation of an Enlarged GDP Including Domestic Production: An Estimation on Micro Data," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-03325362, HAL.
    5. François Gardes, 2021. "A Solution to the Estimation of an Enlarged GDP Including Domestic Production: An Estimation on Micro Data," Post-Print halshs-03325362, HAL.
    6. Maximilian Stockhausen, 2017. "The Distribution of Economic Resources to Children in Germany," SOEPpapers on Multidisciplinary Panel Data Research 901, DIW Berlin, The German Socio-Economic Panel (SOEP).
    7. François Gardes, 2021. "A Solution to the estimation of an Enlarged GDP Including Domestic Production: An Estimation on Micro Data," Documents de travail du Centre d'Economie de la Sorbonne 21024, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    8. Bonsang, Eric & van Soest, Arthur, 2015. "Home Production and Retirement in Couples: A Panel Data Analysis," IZA Discussion Papers 9156, Institute of Labor Economics (IZA).
    9. Marchiori, Luca & Pierrard, Olivier, 2017. "How does global demand for financial services promote domestic growth in Luxembourg? A dynamic general equilibrium analysis," Economic Modelling, Elsevier, vol. 62(C), pages 103-123.
    10. Melanie Borah, 2020. "Estimating Extended Income Equivalence Scales from Income Satisfaction and Time Use Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(2), pages 687-718, June.
    11. Joachim R. Frick & Kristina Krell, 2010. "Measuring Income in Household Panel Surveys for Germany: A Comparison of EU-SILC and SOEP," SOEPpapers on Multidisciplinary Panel Data Research 265, DIW Berlin, The German Socio-Economic Panel (SOEP).
    12. Andrea Brandolini & Eliana Viviano, 2016. "Accounting for total work in labour statistics [Der Gesamtbetrag der Arbeit in den Arbeitsmarktstatistiken]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 49(3), pages 199-212, November.
    13. Joachim Frick & Kristina Krell, 2011. "Einkommensmessungen in Haushaltspanelstudien für Deutschland: Ein Vergleich von EU-SILC und SOEP," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 5(3), pages 221-248, December.
    14. Luca Marchiori & Olivier Pierrard, 2012. "LOLA 2.0: Luxembourg OverLapping generation model for policy Analysis," BCL working papers 76, Central Bank of Luxembourg.
    15. Anil Alpman & François Gardes, 2016. "Welfare Analysis of the Allocation of Time During the Great Recession," Post-Print halshs-01159507, HAL.
    16. Nancy Folbre & Marta Murray-Close & Jooyeoun Suh, 2018. "Equivalence scales for extended income in the U.S," Review of Economics of the Household, Springer, vol. 16(2), pages 189-227, June.

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    More about this item

    Keywords

    Home production; Non-cash incomes; Economic inequality; SOEP; Time use; D31; D13; I32;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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