Contact: nadim.ahmad@oecd.org and seung-hee.koh@oecd.org Measuring Non-Market Production of Households OECD National Accounts Working Party Meeting Paris December 2010 Contact: nadim.ahmad@oecd.org and seung-hee.koh@oecd.org

Drivers Better understanding of comparability of material well-being: catalyst from Stiglitz and many national studies….etc

Household production of non-market services SNA Production boundary includes goods produced on own-account but only dwelling services. Long debate on extension of production boundary to include other services – i.e. those that satisfy the third party criterion. But for a number of reasons, mainly the difficulty in determining a robust market price for these services, they have been excluded from the boundary.

Boundary or not….. ….there is merit in producing estimates, to give a better understanding of material well-being…. ……..Particularly in the context of international comparisons….. as the work demonstrates

Methodology Estimates the value-added of household production Includes a labour component And a capital component

Valuing labour Key is to estimate the cost of labour – two schools of thought Replacement cost Opportunity cost Given a value, total labour costs = cost of labour*hours spent on own-account production of services

OECD Time-Use Surveys Survey of 16+ population: 1140 minutes per day broken down into: paid work, unpaid work, personal care, leisure, and other activities. Unpaid work, broken down into: routine housework; shopping; care; volunteering; and travel related activities. Important to note that there may be some double counting.

Valuing the price of labour Replacement cost approach: Average hourly price of unregistered domestic servants and baby-sitters Opportunity cost approach: Average post-tax hourly wage in total economy

Valuing Capital services Capital input (K) PIM based - constructed from expenditures on consumer durables. Value of capital services: = the price of capital services per unit of the net capital stock multiplied by the net capital stock K . Where the price of capital services is calculated as (r+d)*P(t) and r = real rate of return (4%) d = depreciation rate (20%) P(t) = price index of consumer durables Again, some double counting…..

Average hours worked - 2008

Contribution of labour only % of GDP, 2008

Total household production per capita converted with adjusted PPP, USD per capita, US=100

Decomposing the changes

Next steps Correct for double counting Refine capital estimates Break down production into subcategories Consider growth Gender issues Extending the concept from material well-being to broader notion of well-being to incorporate Leisure Extend coverage to other countries.