Retirement, home production and labor supply elasticities

A standard life cycle model with home production implies a tight relationship between key preference parameters and the changes in time allocated to home production and leisure at retirement. We derive this relationship and use data from the ATUS to explore its quantitative implications. The key finding is that the intertemporal elasticity of substitution for leisure and the elasticity of substitution between time and goods in home production are approximately equal, in contrast to what is commonly assumed.