Structural Transformation, Marketization, and Household Production around the World

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1 Structural Transformation, Marketization, and Household Production around the World Benjamin Bridgman (BEA) Georg Duernecker (University of Mannheim, CEPR, IZA) Berthold Herrendorf (ASU) November / 46

2 1. Motivation Kuznets growth is associated with change in sectoral composition Structural transformation reallocation from goods to service production this is documented for the market sector in richer countries does it happen when the household sector is included? does it happen in poor countries? Marketization reallocation from household sector to market sector this is documented for some rich countries; does it happen in all countries including poor ones? 2 / 46

3 Our Contributions 1. Collect data for a large sample of countries 136 time use surveys from 43 countries hours of household and market production 1/2 of world population and 3/4 of world GDP all levels of development including poor countries (Bangladesh, Ghana, India, Pakistan, Tanzania, Uganda etc) Additional NIPA data for 3 of the 43 countries household worker wages, household capital, interest rates 2. Document new stylized facts around the world for hours and for value added structural transformation in the market and at home marketization of household production labor productivity of household versus market production 3 / 46

4 Sample Countries (by tercile in world distribution of GDP per capita) Top Australia, Austria, Basque Country, Canada, Denmark, Finland France, Germany, Italy, Japan, Korea, Netherlands, New Zealand Norway, Slovenia, Spain, Sweden, Taiwan, UK, Middle Albania, Columbia, Ecuador, Estonia, Hungary, Mexico Panama, Poland, Russia, South Africa, Uruguay Bottom Algeria, Bangladesh, Ghana, Guatemala, India, Iraq Kyrgyz Republic, Macedonia, Nicaragua, Pakistan, Tanzania, Uganda 4 / 46

5 Household Activities Broad categories Adultcare Animal care Childcare Cleaning, household upkeep Construction, repairs Food management Gardening Household management Shopping Textiles care Travel connected to the other household activities Note Main analysis includes childcare as part of household production. Robustness analysis excludes it. 5 / 46

6 2. Stylized Facts about Hours 6 / 46

7 2.1 Structural Transformation Structural transformation in the market: reallocation of hours from goods to service production Plot hours shares against GDP pc for working age population No Structural transformation at home: no reallocation of hours from goods to service production Split household activities in goods and service production Household Activities 7 / 46

8 Structural Transformation in the Market: Share of Service producing Hours Increases with GDP pc Relative Hours per Week Market Service Hours relative to Market Goods Hours GHA IND ZAF ZAF KOR KOR NED NED NOR AUS SWE NOR NZL NED AUS DNK SWE AUS ESP NED NOR JPN FIN POL NED GER SWE AUT HUN DNK FIN JPN NED SWE KOR JPN NOR KOR EST NED ESP KOR JPN AUS DNKFIN GER JPN JPN AUT NOR JPN JPN KOR FIN SLO AUT KOR DNK TWN TWN TWN MEX MEX GDP per capita (1, Internat. 199 $) 8 / 46

9 No Structural Transformation in the Household: Share of Service producing Hours Unrelated to GDP pc Share of Total Household Hours COL MEX UGY ALB MEX RZAECU PAK RZA POL GHA ESP ESP BAS BAS BAS AUSNED DEN NED NED NED NEDAUT SWE NED GER SLO GDP per capita (1, Internat. 199 $) 9 / 46

10 Structural Transformation in the Market and at Home: Share of Service producing Hours Increases with GDP pc 7 Total Service Hours relative to Total Goods Hours Relative Hours per Week POL MEX ZAF ZAF MEX GHA ESP NED NED NEDNED NED DNK NED ESP SWE AUT AUS GER SLO GDP per capita (1, Internat. 199 $) 1 / 46

11 2.2 Marketization Marketization: reallocation of hours from household to market production Plot relative hours against GDP pc for working age population 2.5 Household Hours relative to Market Hours Relative Hours per Week GHA ALG NED NED NED NIC IRQ IRQ ZAF ZAF NED UGA BGD EST POL AUS TZAKGZ PAK NZL AUS HUN SLO NED MEX GER NZL NED GTM MEX NOR FIN GER ESP AUS ALB COL ECU AUS AUT EST FIN IND MKD GER NOR FIN SWE ESP SWE NOR SWE NED DNK AUT BAS AUT KOR KOR PAN SWE NOR NOR DNK FIN BAS BAS DNK DNK KOR TWN TWN JPN JPN JPN JPNJPN JPNJPN KOR TWN KOR KOR KOR GDP per capita (1, Internat. 199 $) 11 / 46

12 What s Behind Marketization? Household hours fall with GDP pc, market hours rise mildly As a result, marketization happens 12 / 46

13 Household and Market Hours 6 Household Hours 6 Market Hours 5 5 Hours per week GHA URY TZA NIC GTM MEXMEX TZA UGA ALG MEX TZAIRQ KGZ ECU EST BGD IRQ IND POL GER AUS AUS AUS COL NOR SLO NED PAKZAF NED NED NZLGER PAN HUN NEDNED AUT AUS ALB AUT FIN SWE GER NZL ZAF NOR SWE ESP NOR EST FIN ESP SWE NED FIN DNK AUT NED SWE NOR NOR MKD KORKOR DNK FIN BAS BAS BAS DNK DNK KOR TWNTWNJPN JPN JPN JPNJPN JPNJPN TWN KOR KOR KOR KOR Hours per week ECU GTM MEX PAN IND COL GER AUT AUS AUT AUT DNK SWE DNK BAS SWE DNKFIN FIN DNK AUS NOR NOR SWE GER SWE ALB NOR NOR BAS NOR ESP UGA TZA KGZ BAS EST EST SLO FIN BGD AUS AUS NED ESP POL NIC HUN GER FIN IRQ IRQ MKD NZL NZL PAK NED NED GHA ZAFZAF NED NED NED ALG GDP per capita (1, Internat. 199 $) GDP per capita (1, Internat. 199 $) East Asian countries have unusually low household hours! They are notable outliers for most of the other analysis. 13 / 46

14 Total Hours 8 Total Hours 7 Hours per week UGA IND NIC KGZ TZA GTM MEX ECU MEX GHA BGD IRQ PAK ALB IRQ ALG ZAF MKD ZAF PAN GER COL AUT SWE AUS NOR EST AUS GER AUT AUS AUS AUT POL SLO FIN SWE SWE SWE NOR DNK FIN NZL NOR NOR EST NOR HUN ESP NZL DNK ESP DNK GER FIN BAS DNK NED NEDNED FIN NED BAS NEDNED BAS NED GDP per capita (1, Internat. 199 $) 14 / 46

15 2.3 Robustness a) Subsample of countries with year around surveys addresses seasonality in agriculture/construction, holidays b) Other definitions household hours without childcare prime age workers years Summary Statistics 15 / 46

16 a) Subsample of countries with year around surveys 6 Household Hours 6 Market Hours 5 5 Hours per week TZA TZA UGA TZAIRQ EST IRQ IND POL AUS AUS AUS COL NOR SLO PAK NZLGER HUN ALB FIN SWE GER NZL NOR SWE ESP ESP NOR EST FIN SWE FIN AUT SWE NOR NOR MKD Hours per week IND UGA TZA IRQ IRQ PAK COL SWE AUT SWE FIN AUS NOR NOR SWE GER SWE ALB NOR NOR NOR ESP EST EST SLO ESP FIN POL AUS AUS MKD HUN NZL GER NZL FIN GDP per capita (1, Internat. 199 $) GDP per capita (1, Internat. 199 $) 8 Total Hours 7 Hours per week UGA IND COL SWE TZA AUS NOR EST GER AUS AUS AUT POL SLO FIN SWE SWE SWE IRQ NOR NZL NOR NOR ALB EST NOR PAK HUN ESP ESP NZL GER FIN IRQ FIN MKD GDP per capita (1, Internat. 199 $) 16 / 46

17 b) Other Definitions 6 Household Hours without Childcare 6 Household Hours for Ages Hours per week TZA GHA NIC ALG TZA MEXMEX EST UGA BGD IND AUS AUS IRQ GER IRQ ECU MEX POLURY SLO NEDNED COL NOR NZL AUS ALB AUS FIN GER HUN NED AUT AUT EST FIN KOR KOR SWE SWE PAKGTM NED NZL SWE PAN NORESP NED FIN SWE FIN DNK AUT KGZMKD NOR NED NORNOR KOR BAS DNK BAS BAS JPN JPN JPN JPNJPN JPNJPN KOR KOR KOR KOR Hours per week URY MEX GHA MEX GTM NIC KGZ MEX TZA UGA TZAIRQALG ECU BGD EST IND GER NED NED NED IRQ PAK POL NOR TZA ZAF GER COL HUN SLO NZL AUS AUS NED PAN NOR AUS AUT AUS ALB AUT EST FIN NED GER NZL KOR SWESWE ESP NOR ZAF FIN FIN KOR DNK MKD ESP NED NEDAUT NOR NOR SWE DNKFIN BAS SWE BAS BAS TWN KOR DNK DNK TWN JPNJPN TWN JPN JPN JPN JPN KOR KOR KOR JPN KOR GDP per capita (1, Internat. 199 $) GDP per capita (1, Internat. 199 $) 6 Household Hours 5 Hours per week GHA URY TZA NIC GTM MEXMEX TZA UGA ALG MEX TZAIRQ KGZ ECU EST BGD IRQ IND POL GER AUS AUS AUS COL NOR SLO NED PAKZAF NED NED NZLGER PAN HUN NEDNED AUT AUS ALB AUT FIN SWE GER NZL ZAF NOR SWE ESP NOR EST FIN ESP SWE NED FIN DNK AUT NED SWE NOR NOR MKD KORKOR DNK FIN BAS BAS BAS DNK DNK KOR TWNTWNJPN JPN JPN JPNJPN JPNJPN TWN KOR KOR KOR KOR GDP per capita (1, Internat. 199 $) 17 / 46

18 2.4 Disaggregate Stylized Facts a) Different patterns for men and women b) Educated people work less at home and more in the market c) Different patterns for housework and household work 18 / 46

19 a) Household Hours for Men and Women 6 Household Hours (men) 6 Household Hours (women) Hours per week GHA TZANIC TZA EST ALG POL NZL NOR SLO AUS AUS DNK AUS FINGER EST GER NZL HUN FIN FIN COL AUT ECU MEX NED NED NED NEDNED NOR NOR ZAF ZAF SWE SWE SWE SWE TZA URY NOR UGA NED PAN NOR ESP NED IRQ FIN KGZ AUT BGD DNK MEXMEX ESP IND GER AUS BAS MKD PAK GTM AUT BAS BAS IRQ DNK DNK ALB TWN TWN TWN JPN JPN JPN JPNJPN JPN GDP per capita (1, Internat. 199 $) Hours per week GTM MEX MEX UGA IRQ KGZ IND IRQ BGD ECU PAK ALG TZA GHA NIC ALB TZA ZAF MKD ZAF MEX GER URY NOR NED NED NED AUS AUS AUT COL EST AUS AUS AUT GER PAN POL SLO NED NZL HUN DNK ESP NOR ESP SWE NED GER NZL SWE NED AUT FIN NOR BAS EST FIN NED FIN FIN JPN JPN JPN SWE TWN TWN DNK BAS JPNJPN JPNJPNJPN BASDNKNOR TWN SWE NOR GDP per capita (1, Internat. 199 $) DNK 19 / 46

20 a) Market Hours for Men and Women 6 Market Hours (men) 6 Market Hours (women) Hours per week JPN JPN JPN JPN GTM MEX JPN ECU JPN JPN JPN MEX GER TWN IND TWN PAN DNK AUS AUT BGD COL TWN DNK AUT IRQ PAK NOR DNK AUT SWE ALB GER AUS IRQ AUS TZA NOR BAS BAS AUS FIN BAS KOR KOR FIN NOR NED NOR SWE ESP KGZ SWE DNK KOR SWE KOR NZL NED GER NZL NOR UGA NIC POL SLO MKD EST NEDKOR ESP KOR FIN NED KOR HUN NED NED ZAF EST NED FIN ALGZAF GHA GDP per capita (1, Internat. 199 $) Hours per week KOR KOR KOR KOR JPN JPN KOR KOR TWN KOR JPN JPN TWN EST JPN ECU FIN JPN JPN SWE TWN PAN SWE BAS AUT AUT FIN DNK DNK COL SWE NORNOR UGA EST SLO DNK BAS FIN FIN AUT SWE NOR KGZ MEX AUS HUN GER NOR GER ESP TZA GTM ALB POL AUS BAS NZL NED GHA NIC ESP IND MKD MEX NZL GER NOR DNK AUS AUS NED NED ZAF ZAF NED ALG BGD NED NED NED PAK IRQ GDP per capita (1, Internat. 199 $) 2 / 46

21 a) Total Hours for Men and Women 8 Total Hours (men) 8 Total Hours (women) Hours per week MEX ECU MEX GTM PAN IND COL GER JPN JPN JPN SWE NIC JPN NOR AUS AUS SWE GER AUT BGD AUS AUS AUT IRQ TZA EST JPN SWE JPN SWE DNKNOR DNK AUTNOR FIN NZL NOR NOR POL DNK NZL FINDNK GER JPN SLO TWN GHA PAK NED TWN ESP NED UGA KGZ FIN ALG HUN EST BAS NED IRQ TWN ESP NED NED NED BAS FIN NED BAS ZAFZAF ALB MKD Hours per week GTM UGA ECUMEX KGZ MEX IND TZA GHA NIC BGD IRQ IRQ PAKALG ZAF MKD ALB ZAF GER PAN AUT COL EST SWE JPN JPN AUS NOR SLO AUT GER JPN POL TWN AUS EST JPN AUT FIN JPN AUS AUS HUNTWN FIN TWN JPN JPN NORESP ESP SWE SWE SWE NZL NOR FIN BAS DNK GER NZL NORNOR FIN DNK NEDNED NED DNK BAS NEDNED DNK BAS NED GDP per capita (1, Internat. 199 $) GDP per capita (1, Internat. 199 $) 21 / 46

22 b) Educated Work less in Household, more in Market 4 Market Hours 4 Household Hours Hours per Week Individuals with primary educ Individuals with tertiary educ Hours by individuals with secondary education Hours per Week Hours by individuals with secondary education 22 / 46

23 c) Housework versus Household Work What about the engines of liberation? Household hours are flat! Establish housework hours decline with GDP pc (mostly cooking and cleaning) Other household hours increase with GDP pc (mostly child and adult care and shopping) 23 / 46

24 c) Cleaning and Cooking Decrease with GDP pc 16 Cleaning and Household Upkeep 16 Cooking and Food Production MEX MEX UGY 12 GHA Hours per week NIC PAK ALB ECU RZA RZA COL POL AUSNED BASGER NED NED SWE BAS AUT SLO ESP NED BAS NED ESP NED DEN Hours per week PAK SLO RZA ECU RZA POL ALB MEX UGY SWE NIC MEX GER ESP AUT AUS COL DEN NED BAS NED ESP NEDNED BAS BAS NED NED 2 GHA GDP per capita (1, Internat. 199 $) GDP per capita (1, Internat. 199 $) 24 / 46

25 c) Care and Shopping Increase with GDP pc 16 Care for Household Members 16 Household Management and Shopping Hours per week NIC PAK GHA RZA ALB COL MEX ECU POL UGY ESP ESP NED NEDGER NED NED BAS AUT NEDEN AUS SWE BAS BAS SLO Hours per week NIC GHA PAK RZA MEX ECU MEX RZA ALB POL COL UGY DEN NED NEDNED NED NED ESP NED AUS SLO ESP SWE GER BAS AUT BAS BAS RZA GDP per capita (1, Internat. 199 $) GDP per capita (1, Internat. 199 $) 25 / 46

26 c) Construction and Repair hardly Changes 16 Construction and Repairs Hours per week GER NIC PAK MEX AUS NED NED NED NED RZA SWE NED NED RZA POL SLO GHA BASBAS DEN ALB AUT ECU MEX UGY BAS COL ESP GDP per capita (1, Internat. 199 $) 26 / 46

27 3. Stylized Facts about Value Added Do stylized facts also hold for value added shares? The literature focuses on market sector. What about structural transformation including hh production? What about marketization? Challenge How to estimate value added of household production Value added of household production not exchanged in the market 27 / 46

28 3.1 Estimating Value Added of Household Production Common methodology across countries Income method Real value added of household sector j(r h + δ h Y h j j )Kh j + wh H h j(r m j = = p h Key condition close market substitutes for Y h, K h j, Hh observed p m, r m j, wm similar to unobserved p h, r h j, wh Microfoundation + δ h j )Kh j + wm H h p m 28 / 46

29 Implementing the Imputation Input factors into household production hours: hh hours from time use surveys capital: consumer durables related to hh production from NIPA (stock from perpetual inventory using U.S. depreciation rates) Market prices of close substitutes market wage of homeworkers 1 year government bond PCE deflator of similar market goods (PPP using OECD 25 benchmark) Summary Statistics 29 / 46

30 3.2 Structural Transformation and Marketization in terms of VA Structural transformation in terms of value added shares market goods increases market services decreases household production decreases (although noisy) Marketization household production relative to market production decreases Plot value added shares against GDP pc 3 / 46

31 VA(market goods) / VA(household + market) IND KOR ZAF ZAF Value Added Share of Market Goods TWN KOR KOR KOR KOR KOR TWNJPN JPN FIN JPN JPNJPN TWN NOR AUS HUN DNKNOR AUTFIN JPNJPN NED FIN NOR SWE GER ESP NEDNED POL ESP DNK NOR AUS AUT AUS AUT SWE DNK SWE GER NED NED FIN EST SLO GDP per capita (1, Internat. 199 $) VA(market services) / VA(household + market) IND Value Added Share of Market Services ZAF ZAF KOR HUN JPNJPN JPN AUT JPN JPN JPN JPN FIN POL AUS AUS AUS TWN KOR KOR FIN TWN ESP AUTGER DNK KOR KOR KOR NED EST FIN AUS DNK AUT FIN NED NED TWN DNK GER ESP NOR NED NED NOR NOR NOR SWE SWE SLO SWE GDP per capita (1, Internat. 199 $) 31 / 46

32 VA(household) / VA(household + market) IND Value Added Share of Household Production ZAFZAF KOR SLO SWE EST SWE SWE NOR AUS AUT NOR NEDGER NED DNK NOR DNKFIN AUS AUTGER ESP NED NED NED ESP AUS DNK FIN NOR POL FIN FIN AUS AUT HUN TWN TWN TWN KOR JPN KORJPN KOR KOR JPN JPN JPNJPN KOR GDP per capita (1, Internat. 199 $) 32 / 46

33 4. Household Productivity Definition Household value added divided by household hours Calculated both parts in previous parts of analysis Findings about household productivity Positively correlated with market productivity Usually less than half of market productivity 33 / 46

34 Labor Productivity of Household vs. Market Household Prod. (1, Internat. 25 $ per Hour) Labor Productivity of Household versus Market Production SWE NED SLO GERNED DNK SWE AUT AUS AUT GER AUS AUS AUS AUT DNK DNK FIN FIN NED NED NOR SWE NORESP NED ESP FIN FIN JPN JPNJPNJPN NZL EST JPNJPNJPN KOR KOR POL HUN KORZAF KORKORKOR TWN TWNTWN ZAF URY Market Productivity (1, Internat. 25 $ per Hour) NOR 34 / 46

35 5. Conclusion Large sample of new data on household sector Robust patterns structural transformation and marketization hours and value added shares rich and poor countries Future work interesting outliers: East Asian countries use of data for other issues 35 / 46

36 6. Additional Material 36 / 46

37 Broad Categories of Household Activities Care for Household Members: Care of adults, children, or sick; Help to an adult family member; Medical care related to children s health; Personal or adult care travel; Travel related to child care. Cleaning and Household Upkeep: Arranging household goods and materials; Caring of textiles and footwear; Cleaning; Doing laundry, ironing, folding, drying; Making beds; Mending and shoe care; Setting table and washing and putting away dishes; Travel related to household care. Construction and Repairs: Decoration, maintenance and small repairs; Handicraft and producing textiles; Home repairs and vehicle maintenance; House construction and renovation; Making, repairing and maintaining equipment; Repairing clothes, tablecloths, blankets, shoes, bags, etc. Cooking and Food Production: Baking and preserving; Food preparation and cooking; Gardening; Home brewing; Hunting, trapping and production of animal skins; Pet care; Picking fruit; Plant, water, fertilize, weed or harvest in a home garden intended for consumption by the household; Raising animals for consumption by the household. Household Management and Shopping: Collecting fuel, firewood, dung, or water; Cutting and stacking firewood; Household management (organizing and planning activities, etc.); Medical and dental care outside home; Office and administrative services (post office, bank, etc.); Other domestic activities (dealing with bills, papers, etc.); Shopping for and purchasing goods and services; Travel connected to above (including waiting for transport); Waiting or queueing for the purchase of goods or services. Back 37 / 46

38 Average Household Hours by Tercile (average not population weighted) Back Bottom Middle Top Baseline Baseline without Japan, Korea, Taiwan Year-around time-use surveys One observation from around Observations for individuals years old Baseline without childcare Men Women / 46

39 Agricultural Work in the Household Hours per week GHA Household Hours Related to Agriculture POL ECU PAK UGY RZA ALB MEX RZA MEX COL SLO GER AUT NED SWE NED NED NED AUS DEN NED ESP NED BAS BAS ESP BAS GDP per capita (1, Internat. 199 $) 39 / 46

40 Microfoundation Utility function β t α 1 t= Endowment ( ) η 1 ( C m,1 η t + α 2 C m,2 + C h t t ) η 1 η η η 1, η (1, ] L t = L m t + L h t 4 / 46

41 Microfoundation Production functions Ct h = F(Kt h, L h + L s t t ) ( ) Ct z = A z σ 1 t [α g Y zt,g σ ( ) σ 1 ] σ σ 1 + α s Y z σ t,s, σ (, 1) Y z t, j = A t, j(k z t, j )θ (L z t, j )1 θ, Â t,g > Â t,s Household budget constraint P m,1 t C m,1 i,t + P m,2 t C m,2 i,t + W s t Ls + i,t Km i,t+1 + Kh + B i,t+1 i,t+1 = W m i,t Lm i,t + (1 δm + R k t )K m i,t + (1 δh )K h i,t + (1 + Rb t )B i,t Back 41 / 46

42 Market VA Total VA Ratio HH K VA Ratio HH Lab. Share (in 1, s of 25 internat. dollars) (col. 3 over 2) (in current prices) Norway US Australia Netherlands Austria Canada Denmark Sweden UK Germany Finland France Japan Italy Spain Taiwan New Zealand Slovenia Korea Basque Country Hungary Estonia Poland Russia Mexico Uruguay South Africa Macedonia Albania Iraq Back 42 / 46

43 Labor Productivity of Household Production 25 Labor Productivity of Household Production 25 Labor Productivity of Household Production Internat. 25 $ per Hour Austria Denmark United States Australia Spain Italy Mexico Internat. 25 $ per Hour 2 Norway Sweden 15 Germany Canada 1 France Estonia 5 Taiwan Russia Great Britain Japan South Africa Korea / 46

44 Wages in the Total Economy and the Household Sector Wage, in current price $ Average Gross Hourly Wages, 25 Household Sector Total Economy Wage difference, in current price $ Difference to Median Wage, 25 Household Sector Total Economy Percentile Percentile Wage difference, in current price $ th 25th Wage Percentile Household Sector Total Economy Wage difference, in current price $ th 1th Wage Percentile Household Sector Total Economy / 46

45 Labor Productivity for Different Assumptions about Rental Price of Labor Labor productivity, in constant $ Labor Productivity of Household Sector computed with average wage with 25 th percentile wage with 75 th percentile wage / 46

46 Labor Productivity of Household Production with Disaggregated Labor Labor productivity, in constant $ Labor Productivity of Household Sector computed with average wage with w 1,HH *H 1 + w 2,HH *H with w 1,total *H 1 + w 2,total *H / 46

Total points. Nation Men kayak Women kayak Men canoe Women canoe Total 600 BELARUS KAZAKHSTAN 54. Page 1 of 4. powered by memórias

Total points. Nation Men kayak Women kayak Men canoe Women canoe Total 600 BELARUS KAZAKHSTAN 54. Page 1 of 4. powered by memórias Total points Nation Men kayak Women kayak Men canoe Women canoe Total HUN HUNGARY 80 4 37 6 803 RUS RUSSIA 5 7 03 8 77 3 GER GERMANY 5 9 8 09 644 4 ESP SPAIN 06 76 0 98 600 5 BLR BELARUS 5 30 6 70 587