Does Home Production Drive Structural Transformation?

53 Pages Posted: 1 May 2016

See all articles by Alessio Moro

Alessio Moro

University of Cagliari

Solmaz Moslehi

Monash Business School

Satoshi Tanaka

University of Queensland

Date Written: April 7, 2016

Abstract

Using new home production data for the U.S., we estimate a model of structural transformation with a home production sector, allowing for both non-homotheticity of preferences and differential productivity growth in each sector. We report two main findings. First, the estimation results show that home services have a lower income elasticity than market services. Second, the slowdown in home labor productivity, started in the late 70s, is a key determinant of the rise of market services. Our counterfactual experiment shows that, without the slowdown, the share of market services would be lower by 5.8% in 2010.

Keywords: Structural Change, Home Production, Services Sector

JEL Classification: E20, E21, L16

Suggested Citation

Moro, Alessio and Moslehi, Solmaz and Tanaka, Satoshi, Does Home Production Drive Structural Transformation? (April 7, 2016). CAMA Working Paper No. 19/2016 . Available at SSRN: https://ssrn.com/abstract=2772362 or http://dx.doi.org/10.2139/ssrn.2772362

Alessio Moro

University of Cagliari ( email )

Via S.Ignazio 17
Cagliari
Italy

HOME PAGE: http://economia.unica.it/deca/

Solmaz Moslehi

Monash Business School ( email )

Wellington Road
Clayton, Victoria 3168
Australia

Satoshi Tanaka (Contact Author)

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072
Australia

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