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Does Home Production Drive Structural Transformation?

Author

Listed:
  • Solmaz Moslehi

    (Monash University)

  • Satoshi Tanaka

    (University of Queensland)

  • Alessio Moro

    (University of Cagliari)

Abstract

Using new home production data for the U.S., we estimate a model of structural transformation with a home production sector, allowing for both non-homotheticity of preferences and differential productivity growth in each sector. We report three main findings. First, the data support a specification with a different income elasticity of market and home services. Second, the non-homotheticity can account alone for the decline in the home services share, while price and income effects together are responsible for the rise of market services. Third, the slowdown in home labor productivity, started in the late 70s, is a key determinant of the late acceleration of the share of market services. We use the estimated model to run a counter-factual experiment and find that, by keeping the average growth rate of home labor productivity as before 1978, the model displays the consumption per capita of market services lowered by 26.1% in 2010.

Suggested Citation

  • Solmaz Moslehi & Satoshi Tanaka & Alessio Moro, 2015. "Does Home Production Drive Structural Transformation?," 2015 Meeting Papers 550, Society for Economic Dynamics.
    • Handle: RePEc:red:sed015:550
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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