Home production as a substitute to market consumption? Estimating the elasticity using houseprice shocks from the Great Recession

The theory of home production suggests substitutability between market consumption and home production. The current paper estimates the intratemporal elasticity between home production and market consumption from within-person variation. Shocks in houseprices induced by the Great Recession are used to infer the extent to which persons adjusted home production in response to decreasing market consumption possibilities. By using a panel data set with detailed information on both consumption spending and time-use, we find an elasticity of -0.65. Although the scope for substitution is limited (about 12% of total consumption), there are non-negligible possibilities to substitute away from market consumption to home production.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

MORE ABOUT NETSPAR


Mission en strategy           •           Network           •           Organisation           •          Magazine
Board Brief            •            Actionplan 2023-2027           •           Researchagenda

ABOUT NETSPAR

Our partners

B20221103_Zwitserlevengrayscale
B20231704_PensioenFederatie_Blacklogo
B20231704_DNB_Blacklogo
B20160708_tilburg university
View all partners