Why do agents consume more services relative to goods as income grows? We present a new theory of structural change which assumes that a representative household satisfies her final needs by means of home-production functions that use as inputs time and either goods or services purchased in the market. The relative purchase of goods and services thus depends, in addition to market prices, on the time requirement needed by each type of home production to satisfy the corresponding need. We calibrate the model to U.S. time series data and find that it can quantitatively account for structural transformation between goods and services, via both increasing relative price and quantity. Roughly half of structural change is accounted for by the fact that over time, the home activity employing services allows for a larger time saving with respect to the home activity employing goods. In addition, even if preferences are homothetic, the calibrated model generates an endogenous income effect, which makes a richer consumer display a larger consumption share of services, as observed in cross-sectional U.S. consumption data. This effect accounts for most of the remaining structural change generated by the model.

We harmonize labor force, household and time use surveys from many countries to build two new data sets, the Harmonized World Labor Force and Time Use Surveys. Using those, we document the gender division of work, in the market and in the household, across the development spectrum. We show that women’s market work is U-shaped in country per capita income, while household production is hump-shaped. For men, market work declines and household production rises in per capita income. The ratio of female to male market hours is lower in low-income compared to high-income countries, and is lowest in middle-income countries. In contrast, the ratio of female to male hours worked in care and in domestic services is substantially higher in low- and middle-income countries compared to high-income ones. To understand the economic forces behind these facts, we write down a rich yet tractable model of household labor supply with home production. The model can be inverted in closed form, so that the determinants of work by gender and marital status can be directly inferred from the data. We find that the more equal division of market and household work in the US over time reflects wage trends, but also a declining gender gap in the differential disutility of market work and household production, as well as a greater female weight in the household utility function. The more equal division of market and household work in high-income compared to low-income countries similarly reflects a combina

How do cities grow in the process of structural transformation? To answer this question, we develop a multi-sector spatial equilibrium model with endogenous land use: land is used either for agriculture or housing. Urban land, densely populated due to commuting frictions, expands out of agricultural land. With rising productivity, the reallocation of workers away from agriculture frees up land for cities to expand, limiting the increase in land values despite higher income and increasing urban population. Due to the reallocation of land use, the area of cities expands at a fast rate and urban density persistently declines, as in the data over a long period. Quantitative predictions of the joint evolution of density and land values across time and space are confronted with historical data assembled for France over 180 years.

During the last three decades, female employment rates have been declining in many developing countries. One common salient feature of early development is the fall in agriculture employment share. Yet many developing countries face various forms of labour mobility barriers especially in relation to movement from agriculture into other sectors. We focus on the strictly implemented hukou system in China as a form of mobility barriers. Using microdata and variations across provinces, we document the positive relationship between the decline in female employment and the decline in agriculture, and the presence of the hukou system reinforces this relationship. Using a multi-sector model with gender and two locations, we analysis the migration and labour supply decisions of households.