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Household Cost Functions And The Value Of Home Production In One- And Two-Earner Families

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  • Homan, M. Eitel
  • van Praag, Bernard M. S.
  • Hagenaars, Aldi J. M.

Abstract

In a household, female labor force participation has important consequences for the household production processes. As a result of the decision to participate more money is coming into the household, but less time is available to spend on housework and leisure activities. The objective of this paper is to estimate household cost functions and the shodaw price assigned by households to housework. We assume that these concepts are significantly different in families where both spouses are participating in the labor force, and those where only one of them is participating. Hence they depend on the discrete choice of the household whether the female will participate or not. We describe the behavior of the household by means of two distinct r6gimes and an endogenous switchig equation explaning the participation decision. Some of the basic determinants of the participation decision are: number of children at home, the age of the female and the income opportunities for the female. The two rftimes are both described by the simultaneous equation model explaning the labor supply, the hours spent on household work by both partners and the shadow price assigned to housework. The model is estimated on a large data base containing 4000 households, collected in the Netherlands in 1983.

Suggested Citation

  • Homan, M. Eitel & van Praag, Bernard M. S. & Hagenaars, Aldi J. M., 1985. "Household Cost Functions And The Value Of Home Production In One- And Two-Earner Families," Econometric Institute Archives 272324, Erasmus University Rotterdam.
    • Handle: RePEc:ags:eureia:272324
    DOI: 10.22004/ag.econ.272324
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    References listed on IDEAS

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    1. Harvey, A C, 1976. "Estimating Regression Models with Multiplicative Heteroscedasticity," Econometrica, Econometric Society, vol. 44(3), pages 461-465, May.
    2. Bernard M. S. van Praag & Nico L. van der Sar, 1988. "Household Cost Functions and Equivalence Scales," Journal of Human Resources, University of Wisconsin Press, vol. 23(2), pages 193-210.
    3. Danziger, Sheldon, et al, 1984. "The Direct Measurement of Welfare Levels: How Much Does It Cost to Make Ends Meet?," The Review of Economics and Statistics, MIT Press, vol. 66(3), pages 500-505, August.
    4. van Praag, Bernard & Goedhart, Theo & Kapteyn, Arie, 1980. "The Poverty Line-A Pilot Survey in Europe," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 461-465, August.
    5. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-694, July.
    6. Diane Colasanto & Arie Kapteyn & Jacques van der Gaag, 1984. "Two Subjective Definitions of Poverty: Results from the Wisconsin Basic Needs Study," Journal of Human Resources, University of Wisconsin Press, vol. 19(1), pages 127-138.
    7. Van Praag, Bernard M. S. & Kapteyn, Arie, 1973. "Further evidence on the individual welfare function of income: An empirical investigatiion in The Netherlands," European Economic Review, Elsevier, vol. 4(1), pages 33-62, April.
    8. Lee, Lung-Fei, 1978. "Unionism and Wage Rates: A Simultaneous Equations Model with Qualitative and Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(2), pages 415-433, June.
    9. Theo Goedhart & Victor Halberstadt & Arie Kapteyn & Bernard van Praag, 1977. "The Poverty Line: Concept and Measurement," Journal of Human Resources, University of Wisconsin Press, vol. 12(4), pages 503-520.
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