Household vs. Personal Accounts of the Labor Market, 1967-97 (with Yona Rubinstein)

Abstract

We construct household-based measures of labor supply by within-household aggregating answers to the usual weeks and hours worked questionnaire items. Household (H) measures are substantially different than the more familiar person (P) measures: H employment rates are relatively higher, with little trend, and relatively little fluctuations. From the H point of view, essentially all aggregate hours trends and fluctuations can be attributed to changes on the "intensive" margin and not the "extensive" margin – a characterization that is opposite of that derived from P measures. The cross-H distribution of hours is richer, and less spiked, than the cross-P distribution. We show how our H measures are consistent with a significant negative effect of one household member's hours on another's, and suggest that such an effect has important implications for interpreting business cycles, gender-specific labor market trends, the importance of the "added worker effect," and the microeconomic modeling of labor supply. For example, the household accounts show that the gender wage gap has closed dramatically among married people and that most of that closing is associated with growing wage inequality in the P accounts.

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