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Measuring Inequality with Consumption Time

Pretnar, Nick (2022): Measuring Inequality with Consumption Time.

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I construct a measure of consumption/leisure inequality from a model featuring Becker (1965) home production. Consumers simultaneously allocate liquid resources toward many different market purchases and time toward both market tasks (labor) and many different off-market activities. Each activity is uniquely associated with products purchased from the market. I use micro data on household time use and spending to quantify the degree to which households across the income distribution value the activities in which they spend time consuming. This measure is fundamentally different from a classic expenditure measure because it accounts for a household’s simultaneous decision to allocate both liquid resources and time toward specific consumption activities. Model-implied dispersion is 3 to 7 times lower than that implied directly by expenditure data and over 2.5 to 5.5 times lower than that implied by wages.

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