Contact: nadim.ahmad@oecd and seung-hee.koh@oecd

Measuring Non-Market Production Measuring Non-Market Production of Householdsof Households

OECD National Accounts Working Party Meeting Paris December Paris December 20102010

Contact: [email protected] and [email protected]

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 well-being…. ……..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: • routine housework; • shopping; • care; • volunteering; • and travel related activities.

• Important to note that there may be some double counting.

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 the price of labour

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 • 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.