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Beyond the Market: Designing Nonmarket Accounts for the United States
knowledge about the production function for human capital, broadly defined, however, it would be difficult to say what the right wage rate might be.
Another candidate wage rate for use in valuing parental time inputs would be the opportunity cost of that time, perhaps proxied by the parent’s market wage rate. This is an alternative that we have rejected in the case of other sorts of home production, reflecting in part our belief that there is likely to be only a weak relationship between productivity in most home production tasks and market wage rates. In the case of parents’ interactions with their children, however, there is evidence that parents with more human capital are more productive not only in the market, but also in fostering the development of their children’s human capital. What we do not know much about, however, is the strength of the relationship between the productivity of parents’ market time and the productivity of the time they devote to child-rearing activities.
As an aside, it may also be worth noting that the opportunity costs of parental time devoted to child care—or more broadly, taking responsibility for their children—may go beyond any potential earnings forgone as a consequence of spending a marginal hour in child care rather than market work. The commitment to bear and raise a child often has life-style implications—e.g., deciding to stop smoking or cease alcohol consumption during pre-pregnancy and pregnancy intervals, changing or postponing career commitments, or choice of location and attributes of the family home. It is difficult to know, however, how one would incorporate this insight into a family care satellite account.
One concern with using the opportunity cost of parents’ time to value their contributions to their children’s human capital is the difficulty, if not the impossibility, of distinguishing between the consumption and the investment components of this care; and we do not suggest that time-use surveys or satellite accounts should attempt to do so. Nonetheless, the relationship between family care and human capital has important implications for the interpretation of nonmarket satellite accounts for other sectors, most notably education and health.