Pathfinding Paper 10

Home Production, Market Work and Structural Transformation - Taryn Dinkelman and Rachel Ngai

Economic growth is often measured as growth in output per market hour. But for many countries, time spent in home production is as large as the amount of time spent on market production. Home production is defined as unpaid time spent on the production of goods and services for one’s own use. For advanced economies, common home production activities are cleaning, cooking and childcare. In early stages of economic development, however, people also grow their own crops, keep small farm animals, make clothes and preserve food. These activities are gradually taken over by the market as the economy develops and markets improve. This process is part of the structural transformation of the economy, as production moves across sectors due to organizational changes and new technology.

The evolution of home production during the structural transformation has important implications for the economic role of women. Traditionally women are the main source of labour for home production, so the substitution between home and market production alters female market hours and wages relative to male. Government policies such as childcare subsidies, taxation of market production, education policy and social/cultural attitudes towards women’s market work provide incentives for or barriers to the marketization of home production.

This paper will review existing evidence on the role of home production in the structural transformation and address the following questions: are developing countries following the historical path of advanced economies in home and market work allocations and in gender gap outcomes? Which factors that were influential in the historical path of advanced economies are at play in developing countries? Which new factors should be considered now? Are advanced country policies that support the marketization of home production relevant for developing countries? What type of new data are needed to answer these questions?