Lei Fang and Guozhong Zhu
Working Paper 2012-19
December 2012

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We document a set of time use patterns in both time series and cross sections. To explain these facts, we propose and estimate a model of time allocation that emphasizes the role of home production technology. We find it necessary to consider both labor-augmenting technology and total factor productivity in home production. Based on the estimated model, we study the effects of proportional tax and lump-sum transfer on time allocation and labor supply, with the roles of home production technology and wage heterogeneity highlighted.

JEL classification: J22, J24

Key words: time allocation, home production, technology

The authors thank Russell Cooper, Daniel Hamermesh, and Richard Rogerson for their insightful comments. They also thank seminar participants at the University of Texas, Shanghai Jiaotong University and the 2012 Midwest Macro Meeting. They thank Mark Aguiar and Erik Hurst for their Stata programs, which make time-use data much easier to work with. The views expressed here are the authors' and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors' responsibility.

Please address questions regarding content to Lei Fang, Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree Street, N.E., Atlanta, GA 30309-4470, 404-498-8057, lei.fang@atl.frb.org, and Guozhong Zhu, Department of Applied Economics, Guanghua School of Management, Peking University, 86-10-62767407, gzhu@gsm.pku.edu.cn.

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