Labor Market Trends and the Changing Value of Time

Two interlocking gears. One has a clock and the other has a dollar sign

Wages and expenditures increased substantially for the average household during the past two decades. At the same time, these gains were not distributed equally across households. In a recent Staff Report published by the Federal Reserve Bank of Minneapolis, Loukas Karabarbounis and Job Boerma develop a framework that accounts quantitatively for both average and divergent trends in labor market outcomes.

Labor Market Trends and the Changing Value of Time
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Using micro data on expenditures and time use, Karabarbounis and Boerma identify the sources of heterogeneity across households, document how these sources have changed over time, and perform counterfactual analyses. The authors find that the increasing productivity of leisure time generates significant welfare gains for the average household and moderates negative welfare effects from the rising dispersion of expenditures and time allocation across households.

Loukas Karabarbounis is an Associate Professor in the Department of Economics at the University of Minnesota
Job Boerma is a PhD candidate in the Department of Economics at the University of Minnesota
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