Measuring Non-Market Production
of Households
OECD National Accounts Working Party Meeting
Paris December 2010
Contact: nadim.ahmad@oecd.org and seung-hee.koh@oecd.org
Drivers
• Better understanding of comparability of material
well-being: catalyst from Stiglitz and many
national studies….etc
Household production of non-market
services
• SNA Production boundary includes goods
produced on own-account but only dwelling
services.
• Long debate on extension of production
boundary to include other services – i.e.
those that satisfy the third party criterion.
• But for a number of reasons, mainly the
difficulty in determining a robust market price
for these services, they have been excluded
from the boundary.
Boundary or not…..
• ….there is merit in producing estimates, to
give a better understanding of material wellbeing….
……..Particularly in the context of international
comparisons….. as the work demonstrates
Methodology
• Estimates the value-added of household
production
– Includes a labour component
– And a capital component
Valuing labour
• Key is to estimate the cost of labour – two
schools of thought
– Replacement cost
– Opportunity cost
• Given a value, total labour costs = cost of
labour*hours spent on own-account
production of services
OECD Time-Use Surveys
• Survey of 16+ population: 1140 minutes per
day broken down into: paid work, unpaid
work, personal care, leisure, and other
activities.
• Unpaid work, broken down into:
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routine housework;
shopping;
care;
volunteering;
and travel related activities.
• Important to note that there may be some
double counting.
Valuing the price of labour
Replacement cost approach:
– Average hourly price of unregistered domestic
servants and baby-sitters
Opportunity cost approach:
– Average post-tax hourly wage in total economy
Valuing Capital services
• Capital input (K)
– PIM based - constructed from expenditures on consumer durables.
• Value of capital services:
= the price of capital services per unit of the net capital stock multiplied by
the net capital stock K .
Where the price of capital services is calculated as
(r+d)*P(t)
and
r = real rate of return (4%)
d = depreciation rate (20%)
P(t) = price index of consumer durables
• Again, some double counting…..
Average hours worked - 2008
Contribution of labour only
% of GDP, 2008
Total household production per capita
converted with adjusted PPP, USD per capita, US=100
Decomposing the changes
Next steps
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Correct for double counting
Refine capital estimates
Break down production into subcategories
Consider growth
Gender issues
Extending the concept from material well-being to
broader notion of well-being to incorporate
Leisure
• Extend coverage to other countries.