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

1. Measuring Non-Market Production of HouseholdsOECD National Accounts Working Party Meeting Paris December 2010 Contact: nadim.ahmad@oecd.org and seung-hee.koh@oecd.org

2. Drivers Better understanding of comparability of material well-being: catalyst from Stiglitz and many national studies….etc

3. 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.

4. 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

5. Methodology • Estimates the value-added of household production • Includes a labour component • And a capital component

6. 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

7. 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.

8. Valuing the price of labour Replacement cost approach: • Average hourly price of unregistered domestic servants and baby-sitters Opportunity cost approach: • Average post-tax hourly wage in total economy

9. 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…..

10. Average hours worked - 2008

11. Contribution of labour only % of GDP, 2008

12. Total household production per capita converted with adjusted PPP, USD per capita, US=100

13. Decomposing the changes

14. 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.