International Choice Modelling Conference, International Choice Modelling Conference 2017

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Sergio R. Jara-Diaz

Last modified: 28 March 2017


Time use models have advanced significantly during the last decade: their theoretical approach has been refined, functional forms have improved and new constraints have been incorporated, among other aspects. However, there is an incipient development of an issue of great importance: the role and influence of external agents on individual time allocation and the recognition of unpaid/domestic work as a distinctive area of research. Hiring domestic providers has many implications. On one hand, the availability of a helper could release household members from domestic maintenance and make it possible for them to spend more time either working to earn more income for the household or performing other activities, possibly influencing households’ spending patterns and improving their quality of life. On the other hand, the presence of a helper may affect the privacy of family life and, eventually, individual time allocation.

Domestic production has not been properly incorporated in time use models. Most studies that analyze the use of external providers have had mostly descriptive and discussion-driven approaches, lacking a proper modeling framework (e.g. Romero, 1987; Cock, 1989; De Melo, 1998; Lan, 2003; Cortes and Tessada, 2007; Huang and Yeoh, 2007). However, there have been some efforts to acknowledge home economics as a source of improvement in the modeling and understanding of the value of time, both individual and social (Jara-Diaz, 2000). If household responsibilities are assumed by market agents, it is reasonable to believe that the activity patterns of some household members will change. Some studies have tried advancing in this area but with limited results. For example, Wang (2006) concluded that hiring an external provider diminishes the number of domestic activities performed by household heads. Wang and Li (2009) studied the households’ decision of hiring domestic agents and their impact on household members’ time allocation to daily activities. Their empirical model was used to predict for all households in a Hong Kong sample whether a domestic helper was hired or not. Their limitation, however, was the lack of an income constraint in their formulation.

In this paper we develop a model explicitly introducing a piece that was missing in previous models of time use: hiring an external agent to perform activities for the individual without losing their intrinsic value, i.e. productive/domestic activities. We take into account the marginal utility of domestic activities, their cost - either if self-produced or hired - and the relation between the domestic output and domestic work hours considering the difference in skills between providers and household members. To our opinion, accounting for the value of household production and domestic work and for the effect of the trade-off between work and non-work activities, such as leisure, allows a better model formulation, and improves the interpretation of the value of time. Furthermore, this expansion of current time use models also benefits from the introduction of (i) explicit domestic production technical constraints and (ii) the substitution between the hours assigned by household members and by external providers to perform certain domestic activities.

This indeed improves over the previous most advanced microeconomic formulations. The impact of this innovation on the value of leisure is examined theoretically first, showing that new effects have to be considered, namely the value of the individual’s own domestic labor, the value of consumption of domestic goods and the cost of the necessary intermediate goods. We also show that these new values of time collapse into the values obtained in previous works under the right assumptions: no external agent hired, intermediate goods and domestic activities considered as committed expenses and committed time respectively.

Using this approach we generate a system of stochastic equations where the endogenous variables are work, domestic/productive activities and those activities that are assigned more time than the minimum required. From this system, the parameters of the implicit equations can be estimated using maximum likelihood techniques without assuming independence of the error terms. The model is estimated using three Dutch weekly time use and consumption databases (waves), one of the few surveys in the world that include the information on time allocation, goods consumption and at least one productive activity that could be hired (childcare), necessary to estimate our model. Comparative results show that a model with no consideration of hired domestic providers overestimates the values of leisure.

For synthesis, incorporating household production, domestic work and the effect of the trade-off between own time and hired work yields a better estimation of the values of time and improves their interpretation. We believe that the analysis of a new category of activities (domestic) and the inclusion of external providers towards the production and consumption of domestic goods significantly enriches the properties of microeconomic models of consumers’ time use.


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Cortes, P. and Tessada, J. (2007), Cheap Maids and Nannies: How Low-skilled immigration is changing the labor supply of high-skilled American women, Working paper, University of Chicago.

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