Chang-Tai Hsieh, Professor of Economics
Erik Hurst, V. Duane Rath Professor of Economics and Neubauer Family Faculty Fellow
Summary: Our goal is to measure how much productivity growth in developing countries is driven by the substitution of low productivity household work to higher productivity market work. There are two reasons to believe this substitution may have occurred in many countries. First, many countries have heavily invested in water and electricity grids. Access to water and electricity may have allowed families to substitute time gathering water and cooking fuels to time working in the market. Second, the population in many countries is now largely urban. Urbanization have also have increased average hours worked in the market, both because of better access to water and electricity in cities and also because workers are closer to potential employers in cities.
We have two objectives in this research. First, we will put together comprehensive cross-country data on hours worked over the last three decades. Many developing countries have detailed household surveys spanning the several decades. For example, the micro-data from the Indian National Sample Survey starting in the early 1980s is publicly available. At a minimum, we will be able to measure hours worked in the market with these data, which will allow us to measure the contribution of increases in market work to aggregate growth in GDP per capita. In addition, several surveys have detailed time use and household consumption modules. For the countries with this data, we will be able to directly measure the substitution of household work for market work. Second, with some assumptions, data on hours worked will allow us to provide estimates of GDP growth that measure the value of household production.