Income, wages and household production theory

With the American Time Use Survey 2003-15 we show that both non-workers and workers with higher household incomes spend less time on two quantitatively important time-intensive activities, sleep and TV-watching. This finding cannot be explained by the standard (Becker, 1965) ”commodity production” model. We modify that model to allow both substitution between time and goods in household production and substitution among commodities in utility functions, which rationalizes these results and suggests a way forward for empirical work on household behavior. •Sleeping and watching TV fall with rising income for both workers and non-workers.•For workers, sleep and TV time are negatively related to the wage.•A home production model allowing time-goods substitution rationalizes these results.•The model explains negative income elasticities of some time uses for non-workers.