THE ELASTICITY OF SUBSTITUTION BETWEEN TIME AND MARKET GOODS: EVIDENCE FROM THE GREAT RECESSION

Aviv Nevo, Arlene Wong

Research output: Contribution to journalArticle

5 Scopus citations

Abstract

We document a change in household shopping behavior during the Great Recession. Households purchased more on sale, larger sizes, and generic products and increased coupon usage and shopping at discount stores. We estimate a decline in returns to shopping during the recession. Therefore, the increase in shopping behavior implies a significant decrease in households' opportunity cost of time. Using the estimated cost of time and time use data, we estimate a high elasticity of substitution between market expenditure and time spent on nonmarket work. We find that households smooth a sizable fraction of consumption by varying their time allocation during recessions.

Original languageEnglish (US)
Pages (from-to)25-51
Number of pages27
JournalInternational Economic Review
Volume60
Issue number1
DOIs
StatePublished - Feb 1 2019

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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