AN ANALYSIS OF FEMALE LABOR SUPPLY, HOME PRODUCTION, AND HOUSEHOLD CONSUMPTION EXPENDITURES

Abstract

Abstract:The United States saw a rapid transformation of its labor market when the female employment to population ratio nearly doubled from 1950 to 2000. As women shift their hours from the home sector to the market sector, goods that were previously produced in the home may be replaced by market services. This paper uses the Panel Study for Income Dynamics, Consumer Expenditure Survey, and the American Time Use Survey to analyze the extent to which households replace home production with purchased market services, and how the relationship between men’s and women’s labor supplies affects these decisions. We show that women who are employed spend less time on home production activities that have close market alternatives than women who are not employed. Additionally, expenditures on market services that can replace home production are higher for married households in which the woman is employed compared to those with nonworking women.