1. Household Production and the Distribution of Income in the United States Cathleen D. Zick, University of Utah, W. Keith Bryant, Cornell University Sivithee Srisukhumbowornchai, University of Utah Research Objectives 1.Use the 2003 ATUS data to examine the impact of adding the value of household production to money income to arrive at a more complete measure of the distribution of household economic well-being in the U.S. 2.Assess how sensitive the estimates are to variations in the definition of housework and the measurement of its value. 3.Compare the income distribution implications for married couples, single women, and single men. 4.Contrast the results obtained with the 2003 data to earlier work done by Bryant and Zick (1985) and Zick and Bryant (1990) using the Panel Study of Income Dynamics. Methodological Strategy Use two alternative measures of time spent in housework –Core housework as defined by the ATUS Lexicon –Housework as defined by Margaret Reid (1934) (i.e., ATUS core housework plus time spent shopping and time spent in child care) Use two alternative measures of the economic value of an hour of housework –Opportunity cost measure based on the predicted after-tax wage rate. These predicted after-tax wage rates are obtained from regressions that correct for sample selection bias (Heckman, 1979) and are estimated separately by gender and marital status. –Replacement cost measure based on the median before-tax wage rate for individuals in the March 2003 CPS who reported that their primary occupation was housekeeper/maid. Only one individual (age 15+) in each household was selected to complete the 24-hour time diary. In households with more than one adult, this would lead to an underestimation of the total household production time. We will follow the imputation methods used by Bonke (1992) to remedy this issue. Time spent in housework over a synthetic year is constructed by: –Estimating housework tobits separately by gender and marital status & controlling for socio-demographic covariates including whether or not the diary came from a weekday or weekend. –Using these tobits to generate predicted time spent in housework for a weekday and a weekend day. These estimates are then used to create a predicted measure of time spent in housework for the year. ATUS 2003 Sample Matched to the March 2003 Social and Demographic Survey Selection Criteria: –white non-hispanic, black non-hispanic, and hispanic respondents, –respondents living with a spouse/partner or living as a single head of household, and –Who were in the March 2003 Social and Demography Survey Sample Size: 5,623 –3,444 married couples –1,398 single females –781 single males Income and wage information were taken from the March 2003 Social and Demographic Survey Time spent in housework for the respondent and socio-demographic information for the respondent and his/her spouse were taken from the 2003 ATUS. The median replacement wage rate, $7.36/hr, was generated from the March 2003 Social and Demographic Survey (weighted) for individuals who reported their primary occupation to be housekeeper/maid (N=1,120, excluding the top and bottom 1%). All estimates that made use of the time diary data were weighted using the 2003 ATUS weight. Socio-Demographic Characteristics of the Sample VariableMarried/Cohab Women (N=1816) Married/Cohab Men (N=1628) Single Women (N=1398) Single Men (N=781) Age4748 41 Education (yrs of schooling)14 13 Born Outside of the U.S. (1=yes).11.12.079.13 # Children < Age 6.23.09.03 Total # Children in the Home.91.88.50.31 Non-Hispanic Black (1=yes).068.079.26.20 Hispanic (1=yes).13.11.14 Predicted Hourly After-Tax Wage9.7413.277.759.12 Telephone (1=yes).97.98.92.95 Cohabitating (1=yes).060.072 --- Enrolled in School (1=yes).043.040.13.17 Retired (1=yes).053.057.10.066 Time Spent in Core Housework (min/day) 17310311765 Time Spent in Core Housework + Shopping + Child Care (min/day) 294172186113 Mean Total Family Income: 2002 Predicted Annual Mean Time Spent in Housework by Gender and Marital Status Hrs/Yr Mean Annual Value of Housework Using Alternative Measures: Full Sample Mean Annual Value of Housework Using Alternative Measures: Married/Cohabitating Couples Disaggregated Mean Annual Value of Housework Using Alternative Measures: Single Individuals Single MenSingle Women % P10/P50P90/P50P90/P10 (Low Income)(High Income)(Decile Ratio) 36 215 602 31 224 720 34 226 667 31 227 728 28 254 934 * Length of bars represents the gap between high and low income households. Numbers in the first two columns of the table are the percent of median household income. Numbers in the last column of the table represent the 90 th percentile income as a percent of the 10 th percentile income. The graph and table presented here are based on the income distribution approach used Garfinkel, Rainwater, and Smeeding (2005). Relative Economic Well-Being as Measured by Money Income Plus the Dollar Value of Housework: Full Sample* % P10/P50P90/P50P90/P10 (Low Income)(High Income)(Decile Ratio) 50 195 389 45 198 433 46 206 446 43 204 467 33 229 686 *Length of bars represents the gap between high and low income households. Numbers in the first two columns of the table are the percent of median household income. Numbers in the last column of the table represent the 90 th percentile income as a percent of the 10 th percentile income. The graph and table presented here are based on the income distribution approach used Garfinkel, Rainwater, and Smeeding (2005). Relative Economic Well-Being as Measured by Income Plus the Dollar Value of Housework: Married/Cohab Couples* % P10/P50P90/P50P90/P10 (Low Income)(High Income)(Decile Ratio) 45 205 452 42 208 491 43 214 496 41 214 525 33 229 686 * Length of bars represents the gap between high and low income households. Numbers in the first two columns of the table are the percent of median household income. Numbers in the last column of the table represent the 90 th percentile income as a percent of the 10 th percentile income. The graph and table presented here are based on the income distribution approach used Garfinkel, Rainwater, and Smeeding (2005). Relative Economic Well-Being as Measured by Money Income Plus the Dollar Value of Housework: The Contributions of Wives in Married Couple Households* % P10/P50P90/P50P90/P10 (Low Income)(High Income)(Decile Ratio) 41 214 521 40 212 529 39 218 565 38 218 572 33 229 686 * Length of bars represents the gap between high and low income households. Numbers in the first two columns of the table are the percent of median household income. Numbers in the last column of the table represent the 90 th percentile income as a percent of the 10 th percentile income. The graph and table presented here are based on the income distribution approach used Garfinkel, Rainwater, and Smeeding (2005). Relative Economic Well-Being as Measured by Money Income Plus the Dollar Value of Housework: The Contributions of Husbands in Married Couple Households* % P10/P50P90/P50P90/P10 (Low Income)(High Income)(Decile Ratio) 52 222 626 44 229 518 48 237 490 44 242 551 34 266 777 * Length of bars represents the gap between high and low income households. Numbers in the first two columns of the table are the percent of median household income. Numbers in the last column of the table represent the 90 th percentile income as a percent of the 10 th percentile income. The graph and table presented here are based on the income distribution approach used Garfinkel, Rainwater, and Smeeding (2005). Relative Economic Well-Being as Measured by Money Income Plus the Dollar Value of Housework: Single Women* * Length of bars represents the gap between high and low income households. Numbers in the first two columns of the table are the percent of median household income. Numbers in the last column of the table represent the 90 th percentile income as a percent of the 10 th percentile income. The graph and table presented here are based on the income distribution approach used Garfinkel, Rainwater, and Smeeding (2005). % P10/P50P90/P50P90/P10 (Low Income)(High Income)(Decile Ratio) 37 231 627 36 236 664 36 237 657 34 235 692 28 247 871 Relative Economic Well-Being as Measured by Money Income Plus the Dollar Value of Housework: Single Men* Caveats Estimation of housework is based on a single diary day. From these single day diaries, we constructed a synthetic year of housework making adjustments for weekday and weekend differences. Estimates for respondents’ spouses were imputed. Estimates are based on reports of primary time spent in housework. No secondary housework time was included. As such, these are lower-bound estimates. Because of the need to match to the March Social and Demographic Supplement, no observations were drawn from the winter quarter. To the extent that housework time differs between winter and the other three seasons, we were not able to control for this factor. Conclusions The 2003 ATUS reveals that large amounts of time are being spent in core (expanded) housework. At one extreme, married women average approximately 21 (35) hrs/wk. At the other extreme, single men average 8 (12) hrs/wk in core (expanded) housework. Estimates of the annual average economic contribution of housework range from $10,128 (core housework using replacement costs) to $23,994 (expanded housework using opportunity costs). Clearly, the economic contributions of housework are substantial. The largest contributions typically occur in married/cohabitating couple households with wives typically contribute the most. This holds for every estimation approach. Similar to Bryant and Zick (1985) and Zick and Bryant (1990), we find a modest decrease in the income distribution range when the economic value of housework is added to money income. This finding holds regardless of which measure we use. The largest gains in terms of decreasing income inequality occur for married/cohabitating couples and single women. Single men experience smaller gains in income equality. Bonke, J. 1992. “Distribution of economic resources: Implications of including household production.” Review of Income and Wealth, 38, 281- 293. Bryant, W. K. And C.D. Zick. 1985. “Income distribution implications of rural household production.” American Journal of Agricultural Economics, 65, 1100-1104. Garfinkel, I. L. Rainwater, and T.M. Smeeding. 2005. “Welfare state expenditures and the redistribution of well-being: Children, elders, and others in comparative perspective.” Working Paper, Syracuse University. Heckman, J.J. 1979. “Sample selection bias as a specification error.” Econometrica 47, 153-161. Reid, M.G. 1934. Economics of Household Production. New York: John Wiley. Zick, C. D. And W. K. Bryant. 1990. “Shadow wage assessments of the value of home production: Patterns from the 1970s.” Lifestyles: Family and Economic Issues, 11, 143-160. References