Revisiting the Role of Home Production in Life-Cycle Labor Supply

Abstract

This paper revisits the argument, posed by Rupert, Rogerson, and Wright (2000), that estimates of the intertemporal elasticity of labor supply that do not account for home production are biased downwards. I use the American Time Use Survey, a richer and more comprehensive data source than those used previously, to replicate their analysis and explore how other factors interact with household and market work hours to affect the labor supply elasticity. In a straightforward replication of their research, I find an elasticity of about 0.4, somewhat larger than previously estimated. In a richer cohort analysis that accounts for demographics, household characteristics, and the endogeneity of wages, however, I obtain an elasticity estimate that is essentially zero.