1. CHAPTER 5: FAMILY AS A PRODUCER
BY : ZURONI MD. JUSOH
Department of Resource Management & Consumer Studies

2. FAMILY AS A PRODUCER Outline: Production For Family Functions.
Market and Non-Market
Household production
Assess the importance of household production
Methods to assess household production
The distribution of time and energy in households
Human capital investment
Category
Methods for evaluating
Consideration

3. FAMILY AS A PRODUCER (cond’t)
Production For Family Functions
Definition
Production is a creation utility
Consumption occur
Fitzsimmons (1973)
Production to create utility (utility creates)
Use the realization utility (utility realizes)

4. FAMILY AS A PRODUCER (cond’t)
Production For Family Functions
Production concept:
“Production involves the creation of utilities and value added to the factors of production”
(Economic Production Perspective)

5. 3 Production Category associated with the time allocation
1) Market production - revenue & earnings
2) Household Production
What is to be produced??
associated with the time allocation
Eg : wife should work only for the production the market?
How do production?
Humans do it alone
e.g. teacher
Humans do it with the help of nature.
e.g. Plant -use of land to farm & rain for water supply.

6. Family As Producer (cond’t)
Human  to do so with the help of nature and equipment / technology.
e.g.planting using machine assistance for 
increasing in productivity.
Who are using the g & s??
Distributable among family members
3) community production
Unpaid activities & volunteer

7. FAMILY AS A PRODUCER (cond’t)
Production activities:
Involve mental and physical process whereby the family members have to plan, perform, evaluate and control

8. FAMILY AS A PRODUCER (cond’t)
Household Production
Definition:
“Unpaid activities done by/for household members, whereby if the economic, financial, market and personal situation permits, the service might be done by other people”
(Margaret Reid, 1934)

9. FAMILY AS A PRODUCER (cond’t)
Conclusion From Definition :
A Household production activities to produce g & s for the needs of members.– i.e. unpaid (so, they are considered as unproductive activities)
the market (market replaceable)
Production activities can be done by a third party without affecting the utility derived by a family member.

10. FAMILY AS A PRODUCER (cond’t)
Examples of Household Production Activities
Food Preparation at home
Washing clothes
House maintenance
Child Care
Shopping
Farming
House Cleaning

11. Family As Producer (cond’t)
According To beutler and Owen (1980) household production activities can be:
Separable
Non separable
Separable (market replaceable)
Household activities that can be delegated to a person who paid for doing that can produce the
The concept is different / separate to use.
e.g. washing clothes, cooking

12. FAMILY AS A PRODUCER(cond’t)
Non-separable (non market replaceable)
Cannot be replaced effectively by paid labor from the market because the activities involve the following factors:
Human behavior OR
Relationship involved
Example
Giving love and affection to their children can not be transferred to
This withdrawal affects the quality of human resources.

13. FAMILY AS A PRODUCER(cond’t)
Importance of Evaluating household production
Calculate the real value (GNP).
Determine the to a divorce, an accident
Be the basis of the results of women's participation in the labor market.
Comparing the productivity of the family.
Explaining the work load of current and future households.

14. FAMILY AS A PRODUCER(cond’t)
Importance of Evaluating household production
Enhance feelings of self-worth.
Increasing appreciation of family members in their work.
Estimating the cost of raising children.
Help to determine how households can contribute to enhance the standard of living.

15. FAMILY AS A PRODUCER (cond’t)
Methods of Evaluating Household Production
1) Opportunity cost approach.
Eg : the market.
2) Market alternative techniques.
Replacement cost - wage rates eg cooking with chef's wife.
The cost of home helpers.
3) Reservation
Estimate the minimum wage rate
Important of time
4) Value added
Input-----process output

16. Household Production Model
Pioneered by Becker in 1965.
Associated with the phenomenon of household behavior.
Focus :
Time, human capital & goods in the market.

17. Household Production Model Framework.
To study in aspects of household production.
Participation decisions of households at the labor market.
The results provide markets & non-market activities.
Human Capital Investment.
The effect of time value of households in the use of various products eg: eating outside.

18. FAMILY AS A PRODUCER (cond’t (cond’t)
Household Production Theory
Describe how g & s and time can be combined to produce a bona commodities satisfying.
So, 3 aspect/important to focus in this field:
G & S
Results related to the distribution of time in the family
Division of household tasks among family members

19. FAMILY AS A PRODUCER (cond’t (cond’t)
Family and Time Allocation
Time - limited resources (individual has 24 hours a day).
Not enough time OR do not know how to manage / allocate time.
3 categories for time allocation :
Leisure
Household production
Job in the market

20. FAMILY AS A PRODUCER (cond’t (cond’t)
Time and Utilities
Working time in the market is not a major source of utility.
Method of Time Evaluating
Observations & observers continue to report themselves.
Self report
To study the overall pattern recalls (the time 24 hours), record the time.

21. FAMILY AS A PRODUCER(cond’t (cond’t)
Implications of Time Allocation
For a large wage, the opportunity high.
Individuals may minimize non-market work.
Individual may choose to make non-market activities if it can produce more cheaply.
Partners will work in the

22. FAMILY AS A PRODUCER(cond’t (cond’t)
Factors influencing the distribution of the time for household production activities:
Number of children
Youngest/oldest child age.
Employment status of the wife - working or not
Educational level of husband and wife
If low level –So need a lot of time for household production activities.
Household income
High, less time in household production activities.

23. FAMILY AS A PRODUCER(cond’t (cond’t)
Time management strategy.
Replace the non-market labor with my sophisticated hardware. Eg. Ordinary oven with a microwave.
Replace labor with labor market is not owned by family members. Eg. Labor husband &their children.
Reduce the quality & quantity of household production.
Reducing the time  allocated for social and community activities.
Reducing the time  allocated for leisure (Leisure) and sleep.
(Strober dan Weinberg, 1980)

24. FAMILY AS A PRODUCER (cond’t (cond’t)
The distribution of household labor.
Ancient: Almost entirely made ​​of specialization Women - at home, men - worked in the market.
Now: women involved in work and bring a lot of changes:
Labor contribution by the husband
The decline of production activities of households.
Decrease the time  allocated for household production.
Automation kitchen household (use microwave).
The phenomenon of "House-husband '.

25. FAMILY AS A PRODUCER (cond’t (cond’t)
Simple fact
Women's participation in market work does not increase the contribution to household production activities by a spouse (husband).
Total time for household production activities by men is relatively smaller.
Total workload for career women are heavier than men - overflow role (role overload).

26. FAMILY AS A PRODUCER (cond’t (cond’t)
The factors influencing the distribution of household labor.
Economic
Bargaining power in the house
Demography
e.g. age
Social
culture
Sex-roles stereotyping

27. FAMILY AS A PRODUCER (cond’t (cond’t)
Human Capital Investment
Human capital???
Quality belongs to everyone from various aspects such as knowledge, health, skills, experience in influencing individual functional activities.
i.e. factors that affect the individual's ability to earn income.
A type of savings
Scope – all activities for improving the quality of human capital
Major contributor in increasing productivity.

28. FAMILY AS A PRODUCER (cond’t(cond’t)
Various ways of Human Capital Investment:
formal education
Training and experience
Exercise before work and after
Job training - must be time for learning how to be better then.
Health - improving life expectancy (through health care)
Migration from place to place have more opportunities.
Improving the lives (jobs, lifestyle).
Educate children & teach them by certain method - as a collateral in the economy in future.

29. FAMILY AS A PRODUCER (cond’t)
Research result:
The rate of return from formal education higher than other types of investments.
The decision go to school or not is based on the return / interest expected.
The selection process - eg. Those who have the ability and a greater probability of success are more likely to invest (HCI) as compared with those who are less talented.

30. FAMILY AS A PRODUCER (cond’t)
Human Capital Investment and Labor Market.
Formal education - Objective: To enhance wealth through increase in future income.
Example:
Additional education increased productivity in the labor market.
Employers realize this and are willing to pay more expensive for those who are highly educated.
Thus, HCI is based on the returns.

31. FAMILY AS A PRODUCER (cond’t)
Human Capital Theory
Assuming HCI (through education) as financial investment.
Consider the costs and returns from the HCI.
Cost - is divided into two types:
Total income during the period of schooling released - opportunity cost.
The cost of spending money e.g. fees, books, tuition
Return - The increase in revenue

32. FAMILY AS A PRODUCER (cond’t)
Additional benefits of each school year differ between:
 Expected income future school for each additional year that passed.
Expected future income if it does not add years of school.

33. FAMILY AS A PRODUCER (cond’t)
Why investment in education in favor among young people.????
MC of education increased when older.
Opportunity costs.
Mental capacity etc.
MB of education less any older.
Each additional year of schooling will shorten the period of employment (closer to retirement age) and the period of income earnings (eg. benefits).

34. Thank you