The Estimation of Household Production Functions: An Improved Way to Examine Production in the Nonmarket Sector

207 p.Thesis (Ph.D.)--University of Illinois at Urbana-Champaign, 1982.In the economic literature, two schools of thought about the behavior of households have emerged. The premise of the first group is that people behave rationally and entirely according to economic principles. The second school of thought holds that (1) rationality involves a careful consideration of alternatives; (2) the behavior of many women is governed by adherence to tradition and not by an examination of possible alternatives; and (3) therefore these women cannot be said to act rationally; (4) consequently, attempts to analyze the behavior of men and women regarding the allocation of time for work at home, are doomed to failure. The results of this research indicate that the first group is wrong. However, a theory is developed by which the preferences of individuals are quantified so that economic analysis can be applied to behavior in the household.In recent years, economists have tried various methods to value the goods and services produced in the home. None has been entirely satisfactory. Perhaps the most promising is based upon the concept of the household production function first introduced in 1965 by Gary Becker. However, application of this approach has been hampered by the difficulty of quantifying household output.In this thesis the techniques of duality theory are used to overcome the problem of measuring output. By hypothesizing alternative production functions, we can derive and then estimate factor demand functions that yield information about the parameters of the underlying production function. Data from the 1976 Panel Study of Income Dynamics generated by the Institute for Social Research at the University of Michigan is used to estimate the coefficients of the factor demand functions. Conclusions are drawn for the form of the household production function. Finally, estimates are made about the dollar value of household production for representative households.U of I OnlyRestricted to the U of I community idenfinitely during batch ingest of legacy ETD