A household production model of demand for childcare and meals: theory and evidence from the Philippines

Abstract

Becker/Mincer theory of home production was the first to systematically incorporate time in economic models, and the theory generated much empirical research in a wide variety of areas. However, the direct applications of Becker/Mincer home production theory in empirical research are scarce because of the innate immeasurability of commodities. In this paper, I recover unobservable commodities from the cost functions under certain assumptions about production technologies. Then, using the Philippine Bukidnon panel study of rural households, I test for the core of the Becker model: negative substitution effects between a time-intensive and a goods-intensive commodity arising from wage increases. The estimates of the structural form as well as the reduced form relative demand between childcare, which represents a time-intensive commodity, and meal consumption, which represents a goods-intensive commodity, support the major predictions of the model.