A Gift of Time
Hitotsubashi University - Department of Economics
FIU; Institute for the Study of Labor (IZA)
Daniel S. Hamermesh
University of Texas at Austin - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)
IZA Discussion Paper No. 6700
How would people spend time if confronted by permanent declines in market work? We identify preferences off exogenous cuts in legislated standard hours that raised employers' overtime costs in Japan around 1990 and Korea in the early 2000s. Using time-diaries from before and after these shocks, we estimate the probability that an individual would have been affected by the reform. Reduced-form estimates show that the direct effect on a newly-constrained worker was a substantial reduction in market time, with the free-up time in Japan reallocated to leisure and personal maintenance, while in Korea the results are mixed, showing some impact on household production. Simulations using GMM estimates of a Stone-Geary utility function defined over time use suggest no effect on household production in either country. Estimation of a household model shows only slight evidence that spouses shared the time gift, nor that one spouse's allocation of non-market time changed when the other spouse's market work was permanently and exogenously reduced.
Number of Pages in PDF File: 40
Keywords: time use, household production, freedom from work, household bargaining
JEL Classification: J22, D13working papers series
Date posted: July 21, 2012
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