Essays on household time allocation decisions in a collective household model

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School of Business | Doctoral thesis (article-based) | Defence date: 2008-12-05
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200 s.
Acta Universitatis oeconomicae Helsingiensis. A, 337
This thesis considers the consequences of traditional division of labour in households in a setting where spouses are allowed to have distinct preferences. This approach leads to different results compared to the traditional unitary approach and is better equipped to take into consideration gender related issues of household decision making. The thesis consists of three theoretical essays where the household production theory is applied in the collective household model. The first essay of the thesis considers joint consumption of the good produced in the household. The novelty of this essay is in simultaneous consideration of public consumption, non-marketable household production and corner solutions in the collective household model. For the model formulated in this essay the effects of exogenous changes in the female household member’s wage are analysed. The change in wage is assumed to affect the decision power in the household according to the bargaining view. Therefore the results obtained differ from those in the traditional framework. The contributions of this essay are threefold. First it is shown how the household consumption bundle adjusts as a result of a change in the decision power in the household. Secondly, it is shown how the time – market good – mix of the good produced in the household responses to the changes in the decision power in the household. Finally, it is shown that the change in the decision power in the household may induce shifts in household optimal time allocation regime. The second essay of the thesis analyses the effects of social norms on female household member’s time allocation decisions. Both unitary and bargaining household models predict that due to the increase in female wages the female household member’s share of the household work should decline. However, according to time use studies this has not happened. Traditional gender roles seem to be persistent in many Western societies despite the fact that female participation in the labour market has increased considerably. I argue that it is possible that social norms and customs of the society in question have their effect on female time allocation decisions. This essay analyses the effects of traditional gender roles on female household member’s time allocation decisions in the collective household model. It is shown that the response of the female household member’s time allocation with respect to strengthening norm for tradition depends on the household members’ attitudes towards the social norm of the society and on the distribution of decision power in the household. The essay analyses as well the policy implications in the presence of norm for tradition. It is shown that family policy can, depending on the policy measure, either reinforce or mitigate the effect of tradition on female labour supply. The third essay of this thesis extends the collective household production model into dynamic framework where time allocation decisions made in previous periods affect the decision making and allocation of resources in subsequent periods. It is widely argued in the literature that combining dynamics with endogenous decision power in the collective household model leads into solutions that fail Pareto efficiency. If decision making power in the household is driven by the household members’ actual earnings, the resulting labour supplies can be inefficiently high. This is because the household members recognize the decrease in their future bargaining power due to the time devoted into household work. Decreasing say in the household implies lower private consumption in the future for the individual in question. It is shown here that household solution will be on the efficient frontier when the joint consumption of the domestic good is taken into consideration. If attention is given only on the household members’ private consumptions, the solutions will fail Pareto efficiency
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Haaparanta, Pertti, professor
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