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

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

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.