Working Paper

Bundling Time and Goods: Implications for Hours Dispersion

Abstract: We document the large dispersion in hours worked in the cross-section. We account for this fact using a model in which households combine market inputs and time to produce a set of nonmarket activities. To estimate the model, we create a novel data set that pairs market expenditures and time use at the activity level using data from the Consumer Expenditure Survey and the American Time Use Survey, respectively. The estimated model can account for a large fraction of the dispersion of hours worked in the data. The substitutability between market inputs and time within an activity and across a sizable number of activities is key to our results. We show that models that lack these features can only generate one third of the observed hours dispersion.

Keywords: time allocation; consumption expenditures; hours dispersion; elasticity of substitution; diversity; college graduates; consumption (Economics) - United States; hours of labor; labor supply;

JEL Classification: D11; E21; J22;

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Bibliographic Information

Provider: Federal Reserve Bank of Atlanta

Part of Series: FRB Atlanta Working Paper

Publication Date: 2020-01-01

Number: 2020-1