How would people spend time if confronted by permanent declines in market work? We identify preferences off exogenous cuts in legislated standard hours that raised employers’ overtime costs in Japan around 1990 and Korea in the early 2000s. Using time-diaries from before and after these shocks, we predict the likelihood that an individual would have been affected by the reform. The direct effect on a newly-constrained worker was a substantial reduction in market time, with the freed-up time reallocated mostly to leisure and personal maintenance, and very slightly to household production. Simulations using GMM estimates of a Stone-Geary utility function defined over time use suggest similar results. The economy-wide drop in market work time was reallocated solely to leisure and personal maintenance. In the absence of changing household technology a permanent time gift leads to no change in time spent in household production by the average individual. |
