Homework in development economics: Household production and the wealth of nations

S. L. Parente, R. Rogerson, R. Wright

Research output: Contribution to journalArticlepeer-review

Abstract

We introduce home production into the neoclassical growth model and examine its consequences for development economics. In particular, we study the extent to which one can account for international income differences with differences in policies that distort capital accumulation. In models with home production, such policies not only reduce capital accumulation but also change the mix of market and nonmarket activity. Hence these models can generate larger differences in output than standard models for a given policy differential. We also show how the welfare implications change when we incorporate home production.

Original languageEnglish (US)
Pages (from-to)680-687
Number of pages8
JournalJournal of Political Economy
Volume108
Issue number4
DOIs
StatePublished - Jan 1 2000
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics

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