During every day’s “foregone market work hours,” unemployed people are occupied with home production, leisure, and job search. The day’s time allocation, though, is far from equal. Home production and leisure activities predominate.
More specifically, from the most time to the least: 1) home production, 2) TV and sleep 3) other leisure activities 4) education and community activities 5) job search
The economic significance? By comparing lost market work hours to increased home productivity, we can better determine the cost of a recession.
The Economic Lesson
Economically defined, cost is sacrifice. During a recession, we sacrifice the paid work that the unemployed had been doing. However, do the numbers reflect more of a sacrifice than actually occurs?
Developed as a concept by Simon Kuznets (1901-1985) during the 1930s, the GDP is supposed to include only goods and services that have a money value. Because lots of unpaid work is done at home, should we add the home production done by the unemployed to see what our economy really is producing?
An Economic Question: Could the GDP include unpaid production? Explain.