Household Production Function Research Articles

(Joint) Bank Savings, Female Empowerment, and Child Labor in Rural Ethiopia

Abstract This study examines whether the random allocation of single and joint savings accounts to cash crop farmers in rural Ethiopia is associated with increased savings and changes in decision-making authority and control over resources that could ultimately affect child labor and schooling resource allocations. Consistent with posited channels of intrahousehold bargaining models, women from households assigned to the joint saving treatment group show significant gains in autonomy and control of savings resources, broader financial empowerment, and increased labor participation. Positive effects on school participation and attendance are reported for girls, although point estimates are measured imprecisely. In a setting where schooling and child labor are not mutually exclusive, children work more when joint deposit accounts are available. In the absence of impacts on household income, this increase in child labor is explained by complementarities between adult farm labor and child labor in the household production function, which is reinforced by lumpy investments in labor-intensive agricultural inputs that likely increased the opportunity costs of children's time.

Investigating the impacts of drinking water quality on house prices: A household production function approach

Water provides many important, and some essential, services. The quality of the piped water entering a household impacts the value generated by these services. Household response options include treating the piped water, using water from an alternative source, and selecting a community with different piped water quality. This intersection between location choice and community piped water quality may manifest as a house price effect. We adapt a residential sorting model to identify variables that characterize the relationship between piped water quality and house price. Many studies explore the impact of locational and structural attributes on house prices but very few include piped water quality. In our model, households in a given community produce water services using piped water, materials and capital or purchase water from an alternate source. A housing rental price equilibrium emerges after households sort themselves among communities varying in piped water quality and alternate source water cost. The presence, direction and size of the relationship between house price and community piped water quality depends on that piped water quality, the cost of treating it, and the quality and cost of substitutes. Absent accounting for these community level characteristics, both measuring and interpreting a relationship between property prices and piped water quality will be questionable. Our model results also suggest that if households know their piped water quality and can afford to invest in treatment or purchase of the substitute, they may adequately avert the impacts of poor quality piped water. • A household production function model represents household water use choice. • A sorting like equilibrium relates housing rental prices to piped water quality. • Impact of quality on rental prices moderated by input prices and substitutes. • Measuring benefit of improving piped quality must consider relevant prices and substitutes. • Ensuring households have and can use quality information needed for optimal self protection.

Welfare Impact of Dust Pollution on Human Health in the District Khyber Ex-FATA, Pakistan

Dust pollution is among the major cause of disease and death all around the world. The lungs and respiratory system are the primary targets of ambient dust pollution. This study aims to estimate the health cost due to dust pollution from a stone crushing industry in the Khyber district of ex-fata, Pakistan. To examine the impact of dust pollution on respiratory illness, primary data was collected from 1278 individuals from 200 households living within a 3 km radius of the stone crushing industry. The Household Production Function and Mitigation Cost Function were used to determine the reduced-form equations for assessing the impact of dust pollution on human health and then estimating the monetary cost related to mitigating such diseases. The PM10 level in the crushing region was extremely high, averaging 1247g/m3, while the PM10 level in the control group was relatively low, at 45g/m3. According to our study, the regression analysis estimated that by reducing PM10 to a safe level, every individual could save PKR 4958 per year through mitigation costs. The Total welfare gain for district Khyber will be PKR 2453.306 million or (PKR 2.45 billion). Aside from that, individual productivity loss is estimated to be .37 per day per year. The monetary value of avoiding the restricted working day is PKR 23 for one home, whereas the monetary benefit of lowering the PM10 level is PKR 161000/ for the entire district. The research study suggests implementing the ban on stone crush production and technology adaptation in the residential areas.

Household Production and Time Allocation Behaviour to Climate Change of Nepal

This study investigates empirically how forest resources production and time allocation’s behavior links with climate change issues by using a household survey in a mid-hill village of Nepal. We use Cobb Douglas’s production function theory to develop a household production function econometric model. We use two-character households: unemployed and forest-dependent population for observation of time allocation behavior for household production. In addition, we use poverty and illiteracy of household characters for understanding its effect on household decision behavior and production behavior. In outcomes of the study, household production behavior of rural people results in higher dependency on forest biomass and its consequence climate change cause issue.

Household time activities, food waste, and diet quality: the impact of non-marginal changes due to COVID-19.

In early 2020, a novel coronavirus quickly spread across the globe. In response to the rapidly increasing number of confirmed U.S. cases, state and local governments suggested social distancing, issued stay-at-home orders, and restricted travel, fundamentally changing how individuals allocate time. Directly impacted time activities, such as work, eating food away from home, grocery shopping, and childcare significantly impact two food-related topics: household food waste and diet quality. In order to investigate these non-marginal time changes, we predict weekly time allocated to seven activities for households in the National Food Acquisition and Purchase Survey using information from the American Time Use Survey. Jointly estimating household production functions for food waste and diet quality, we find that time events that are related to fresh produce consumption, such as increased grocery store trips and time spent in FAH activities, are related to higher diet quality, but lower food waste. While time events that are associated with quick convenient meals, such as time spent in secondary childcare and work time, are also associated with lower food waste, these events decrease household diet quality. We then predict the level of household food waste and diet quality for three COVID-19 scenarios: one where the household head is likely able to work remotely, another where the household head is likely to lose their job, and a third, where the household head is likely to be considered an essential worker. Households without children that are likely able to work remotely are predicted to have lower levels of food waste and higher diet quality, while households without children in the other two COVID-19 scenarios are predicted to have only minor differences.

A theoretical analysis of the direct rebound effect caused by energy efficiency improvement of private consumers

This study systematically examines, with the aid of modern microeconomic theory, the theoretical foundations of the direct rebound effect caused by energy efficiency improvement of private consumers. It establishes a utility maximization problem for the private consumer and analyses consumer behaviors under different classical functional forms of household production, such as Cobb–Douglas, Leontief and Constant Elasticity of Substitution (CES) when energy efficiency improves at the household level. Furthermore, it builds upon existing knowledge of the rebound effect and proposes a generalized nested functional form of household production behavior allowing for understanding the energy efficiency improves of an appliance where energy is not the only input to produce a certain service, such as kilometers traveled. This study contributes to the theoretical literature in direct rebound effect and provides insights on the rebound break-even condition of the household production function. The backfire condition is also discussed under different functional forms of the household production function. It shows that under certain circumstances, where elasticity of substation is large, backfire will be unavoidable when energy efficiency improves.

Ambient indoor air pollution and its consecutive effect on environment materials and health

The economic cost of urban air pollution is measured by considering household health production function model which consists of health production function, demand function for mitigating activities and demand function for averting activities. To supplement the analysis of cost of illness approach, on the contingent valuation survey is also employed. The ordered logistic regression model is used to analyze the factors affecting willingness to pay for reducing urban air pollution.The total suspended particulate matter (TSPM or PM10) and the respirable suspended particulate matter (RSPM or PM2.5) are considered as criteria pollutants. It is found that PM10and PM2.5 concentration has exceeded the National Ambient Air Quality Standards Suggested by in all the monitoring stations of study area. It is two to three times higher than the average annual standard. The results have shown that cough, dust allergy and asthma are more prevalent in the study area.

Like Attract Like? A Structural Comparison of Homogamy across Same-Sex and Different-Sex Households

In this paper, we extend Gary Becker's empirical analysis of the marriage market to same-sex couples. Becker's theory rationalizes the well-known phenomenon of homogamy among different-sex couples: individuals mate with their likes because many characteristics, such as education, consumption behaviour, desire to nurture children, religion, etc., exhibit strong complementarities in the household production function. However, because of asymmetries in the distributions of male and female characteristics, men and women may need to marry "up" or "down" according to the relative shortage of their characteristics among the populations of men and women. Yet, among same-sex couples, this limitation does not exist as partners are drawn from the same population, and thus the theory of assortative mating would boldly predict that individuals will choose a partner with nearly identical characteristics. Empirical evidence suggests a very different picture: a robust stylized fact is that the correlation of the characteristics is in fact weaker among same-sex couples. In this paper, we build an equilibrium model of same-sex marriage market which allows for straightforward identification of the gains to marriage. We estimate the model with 2008-2012 ACS data on California and show that positive assortative mating is weaker for homosexuals than for heterosexuals with respect to age and race. Our results suggest that positive assortative mating with respect to education is stronger among lesbians, and not significantly different when comparing gay men and married different-sex couples. As regards labor market outcomes, such as hourly wages and working hours, we find some indications that the process of specialization within the household mainly applies to different-sex couples.

The role of evolving marital preferences in growing income inequality

In this paper, we describe mating patterns in the USA from 1964 to 2017 and measure the impact of changes in marital preferences on between-household income inequality. We rely on the recent literature on the econometrics of matching models to estimate complementarity parameters of the household production function. Our structural approach allows us to measure sorting along multiple dimensions and to effectively disentangle changes in marital preferences and in demographics, addressing concerns that affect results from existing literature. We answer the following questions: Has assortativeness increased over time? Along which dimensions? To what extent can the shifts in marital preferences explain inequality trends? We find that, after controlling for other observables, assortative mating in education has become stronger. Moreover, if mating patterns had not changed since 1971, the 2017 Gini coefficient between married households would be 6% lower. We conclude that about 25% of the increase in between-household inequality is due to changes in marital preferences. Increased assortativeness in education positively contributes to the rise in inequality, but only modestly.

Earnings Gaps for Conspicuous Characteristics: Evidence from Indonesia

Recent research has begun to analyze the effects of height on earnings in Indonesia, a developing country with a large population. Little has been done on the potential effects of weight and general health status on earnings. Using a household production function, Grossman and Benham (1974) provide empirical evidence of the positive effect of good health on earnings. Carefully accounting for selection into the workforce and the potential endogeneity of our health variables, we use a sample of individuals between the ages of 25 and 55 from the Indonesian Family Longitudinal Survey (IFLS) to identify the effect of health on earnings and conduct Oaxaca‐Blinder decompositions to identify possible discrimination. We compare these results to those using less conspicuous health measures such as blood pressure, cholesterol, and chest pain. Endogeneity of our health measures is subsequently addressed using several econometric methodologies. Results suggest that overweight males in Indonesia earn an income premium, while underweight females are subject to an income penalty.

Education and family health care spending

Michael Grossman's seminal work on the demand for health extended the concept of a household production function to the commodity “good health.” In this framework, education represents an “environmental variable” that enhances the monetary returns to investments in health through the use of time and medical care in health production. Using data from the 2004 to 2012 Medical Expenditure Panel Survey (MEPS), we examine the association between parental education and family health care spending in single‐mother and two‐parent families. We estimate one‐ and two‐part expenditure models for total family health care spending, for specific components of such spending, and also examine the impact of parental education on selected measures of family health. Controlling for family income and health insurance status, we find consistent evidence that parental education beyond 12 years of schooling is associated with increases in family health care spending and with reductions in the likelihood of adverse health conditions.

Parenting style as an investment in human development

We propose a household production function approach to human development that explicitly considers the role of parenting style in child rearing. Specifically, parenting style is modeled as an investment that depends not only on inputs of time and market goods, but also on attention. Our model relates socioeconomic disadvantage to parenting style and human development through the constraints that disadvantage places on cognitive capacity. We find empirical support for key features of our model. Parenting style is a construct that is distinctive to standard parental investments and is important for young-adult outcomes. Effective parenting styles are negatively correlated with disadvantage.

Does Finance Access Matters for Children? An Evidence Form Indonesia Family Life Survey 5 and 4

As explained in the declaration of Sustainable Development Goals (SDG) in January 2016, two of the achievements are good health and wellbeing and quality education. Households as one of the drivers of the economy, household should be able to improve this achievement. Because There are two kinds of household’s outcome such as; child health and child education. One of the factors that influence this outcome is household financial access. A household who had better access on finance was more sustain than the other. This study aims to examine the impact of household financial acces on child education and child health. Source of data that used is Indonesia Family Life Survey (IFLS/SAKERTI) year 2014 and 2007. The recognition that finance access is an input in a household's production function has major implications for development. It suggests that the acquisition of human capital and the establishment of a physical infrastructure needs to be complemented by human investment the estimation is done in three ways; pooled OLS, fixed effect and random effect. The result shows that finance access matters for child health, specially the availability of BRI and BMT in village. And for child education, finance access specially the availability of BRI and BMT in village have positive impact for child education.

Household Chores, Time Allocation and Job Performance: An Empirical Study from Chinese Manufacturing Workers

This paper fills the gap through theoretical reasoning and empirical testing of the effects of housework on job performance. Guided by the time allocation theory, the study proposed an optimization model based on the household production function, which indicates that an increase of time spent on housework will improve individual job performance with a progressive increase in the marginal return of housework time to household production. A field study using assembly-line workers in a Chinese manufacturing factory partially supported the proposition, suggesting that workers with longer housework time have accumulated higher character skills, particularly female workers.

A network approach to economic models of fertility

Since its first appearance in the late 1950s, the neoclassical economic theory of fertility, particularly as exemplified by Gary Becker’s model of household production function that assumes a unitary utility function of the household, has become one of the most popular paradigms with which to examine fertility changes. Recently, the bargaining model that assumes separate utility functions has emerged as a strong opponent to the original paradigm. This article provides network foundation to reconcile two competing economic paradigms. Our formal model predicts that the way in which separate utilities of couples are treated in their joint childbearing decisions depends on the network embeddedness of spouses (i.e. the intra-household network). If spouses are not embedded into each other’s networks, the assumption of the unitary utility function is no longer warranted, and their decision process follows the bargaining model. However, strongly embedded couples behave as if they share the common utility function, predicted by the Becker model. Our model prediction is supported by analysis of three waves of panel data, Korean Longitudinal Survey of Women and Families, collected in South Korea where a dramatic drop in the fertility rate is reported. We find that the wife’s bargaining power, measured by the income difference between couples, can exert its influence on having a new-born child only when couples’ intra-household networks are weakly embedded, whereas strongly embedded couples consistently maintain high fertility rates regardless of how much the wife earns. We conclude that social networks play a significant role in shaping how neoclassical economic models of fertility work and discuss its implication to the efforts enhancing the fertility rate.

Parenting Style as an Investment in Human Development

We propose a household production function approach to human development in which the role of parenting style in child rearing is explicitly considered. Specifically, we model parenting style as an investment in human development that depends not only on inputs of time and market goods, but also on attention, i.e. cognitive effort. Socioeconomic disadvantage is linked to parenting style and human development through the constraints that it places on cognitive capacity. Our model finds empirical support. We demonstrate that parenting style is a construct that is distinct from standard goods- and time-intensive parental investments and that effective parenting styles are negatively correlated with socioeconomic disadvantage. Moreover, parenting style is an important determinant of young adult's human capital net of other parental investments.

Can poor farmers afford higher micro-credit interest rates than the un-poor?

Purpose – The purpose of this paper is to test whether there is higher return rate of investment for poor farmers than for un-poor farmers and to discuss its implication for poverty reduction microcredit rate policy. Design/methodology/approach – By using the household-level data of six provinces of China, farmer household production function is used in this paper to estimate the investment return rate of farmer. Findings – The paper indicates that regardless which kind of grouping standard is adopted, the investment return rates of poor farmer households in general are far lower than the non-poor. In general, the richer a farmer household, the higher is the return rate of his household productive operations. Practical implications – The study of this paper reminds policy makers that poverty reduction microcredit rate should really take endurance capacity of poor farmers for credit rate into accounting because of the low return rate of their family investment. Exorbitant credit rate should be avoided to protect the credit right of poor farmers. Originality/value – There is seldom study on the comparison of return rates of family operation investment between poor and un-poor farmers; there is also unenough empirical study on the rationality of high interest rate on poor households from the return rate of investment point of view. The authors expect this paper will have some contribution on these two points.

Parenting Style as an Investment in Human Development

We propose a household production function approach to human development in which the role of parenting style in child rearing is explicitly considered. Specifically, we model parenting style as an investment in human development that depends not only on inputs of time and market goods, but also on attention, i.e. cognitive effort. Socioeconomic disadvantage is linked to parenting style and human development through the constraints that it places on cognitive capacity. Our model finds empirical support. We demonstrate that parenting style is a construct that is distinct from standard goods- and time-intensive parental investments and that effective parenting styles are negatively correlated with socioeconomic disadvantage. Moreover, parenting style is an important determinant of young adult's human capital net of other parental investments.

Do the Poor Benefit from Corporate Social Responsibility? A Theory-Based Impact Evaluation of Six Community-Based Water Projects in Sri Lanka

Corporate Social Responsibility (CSR) can work as an effective means towards minimising business risk and maintaining amicable relationships with diverse groups of stakeholders. While many studies have examined the impacts of CSR on firm value and customer perceptions, little is known about the effects of a philanthropic engagement of the private sector on external stakeholder groups, such as local communities in developing countries. This paper examines welfare effects of six community-based water supply projects that were supported by a thermal power plant in Sri Lanka as part of the company's CSR strategy. The implications of these CSR activities are analysed from the perspective of the project beneficiaries, the majority of them poor smallholder farmers. Household production and labour income functions are estimated from survey data to analyse two pathways through which the water projects affect the beneficiaries' lives. First, the households get individual access to water that allows for the irrigation of home gardens, increases land productivity and changes households' farm output and income (irrigation channel). Second, the projects have an indirect effect on households' income via a time channel, i.e. the effect that due to the individual water access the households save time as there is no need any more to fetch water from far away water bodies or wells. This allows for a reallocation of labour time for other productive income-generating activities. Despite the considerable costs that households have to bear for an individual water connection, the study finds a systematic, positive net income effect of the projects on the beneficiaries via both the irrigation and the time channel. Qualitative evidence supports these findings and also reveals additional positive, non-monetarised project impacts. As the water projects would not have been realised without the subsidiary financial support of the power plant, it is concluded that the company's CSR engagement is increasing the welfare of the beneficiary communities.

Prolegomenon to a Structural Human Ecology of Human Well-Being

There is a growing dissatisfaction with using standard measures of affluence, such as gross domestic product, as the sole conceptualization of human well-being. Experiments are underway with alternative metrics of well-being as ways of informing both research and policy. It is thus important to develop a theory of the production of human well-being to parallel theories of economic development and growth. The traditions of work in growth theory, sustainability theory, and household production functions provide the basis for an emerging structural human ecology of human well-being. Structural human ecology emphasizes the use of manufactured, natural, and human resources in producing well-being but is also attentive to the ways social structure shapes the production of well-being. While this approach is promising, several conceptual issues need to be addressed for it to realize its potential. In particular, we need greater clarity regarding measures of well-being and the ethical theory that underpins them and clearer thinking about the relationship between resources and capital.