Discussion Paper Details

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Title: Rising inequality and trends in leisure

Author(s): Timo Boppart and Liwa Rachel Ngai

Publication Date: September 2017

Keyword(s): balanced growth path, Home Production, inequality, Labor Supply and leisure

Programme Area(s): Labour Economics and Macroeconomics and Growth

Abstract: This paper develops a model that generates rising average leisure time and increasing leisure inequality along a path of balanced growth. Households derive utility from three sources: market goods, home goods and leisure. Home production and leisure are both activities that require time and capital. Households allocate time and capital to these non-market activities, work and rent capital out to the market place. The dynamics are driven by activity-specific TFP growth and a spread in the distribution of household-specific labor market efficiencies. When the spread is set to match the increase in wage inequality across education groups, the model can account for the observed average time series and cross-sectional dynamics of leisure time in the U.S. over the last five decades.

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Bibliographic Reference

Boppart, T and Ngai, L. 2017. 'Rising inequality and trends in leisure'. London, Centre for Economic Policy Research.