Question

1. What is "household production" and how is its value measured?

2. Describe in detail the long-run trends in the value of U.S. household production?

3. If the value of household production were included in GDP, how would this change the growth patterns of U.S. GDP over time?

Answer 1

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1) Meaning : household production & value measurement

Household production is the production of goods and services by the members of a household, for their own consumption, using their own capital and their own unpaid labor

Data on the outputs of household production—accomodation, meals, clean clothes and the care of children and adultswill complement data on inputs of unpaid labor time and the use of household equipment, vehicles, and housing

National statistical organizations will produce regular quarterly estimates of gross household product (GHP) through ‘satellite’ accounts of household production

2) Long-run trends in the value of U.S. household production

Household production of care services grows at the same rate as government production of these services. This assumption may be positively biased. The scope for further outsourcing of household production of these services is limited due to increased female market labor participation

Recent trends in House hold production are these may include activities for which a perfect substitute is directly available in the market, housework or home decoration for example; but they may also include activities for which a perfect substitute is not readily available, childcare, for example

3) Hosehold Production and growth patterns of U.S. GDP

Many of the activities undertaken within households satisfy this basic criterion but the outputs are not actually offered on the market being retained for consumption within the household. For example, households may grow their own food or other agricultural products. In poor countries, a large part of the total production and consumption not only of food but other basic products may consist of nonmarket production for their own consumption.

Unofficial estimates suggest that the unrecorded production of household service for own consumption could equal a half to two thirds of GDP as conventionally defined. If the definition of GDP were changed to include this production, GDP would rise dramatically.

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