It is the first day back to school for the kids, but it’s also Claire’s first day at her new job working for her father, Jay. Phil tries to be supportive, but refers to the last 20 years that Claire has spent as a stay at home mom as a vacation. The Income Leisure Tradeoff model assumes that participants can decide between working at paid employment or spending their time in leisure, but household production is often encapsulated in leisure. The household production model recognizes that time spent at home in productive activities is different than time spent in leisure.
See more: employment, income leisure tradeoff, household labor supply, household production, labor force participation, specialization, tradeoffs, unemployment
There are two concepts shown in this clip that can be used based on the portion of the course. First, Haley weighs two different career options and must consider the costs of each. Haley meets a woman who is interested in searching for a new husband who will die soon so that she can take their inheritance. The woman essentially offers to hire Haley as her personal assistant, but she’ll get to do leisurely activities. Luke tries to convince Haley to stick with the golf course because it provides a better future for her. Selecting one jobs means she can’t enjoy the benefits of the other.
The second concept covers the notion of labor-leisure tradeoffs. In the standard Income Leisure Tradeoff model, consumers are given a choice of determining their distribution of time based on the available number of hours in a day. Haley considers similar options here in terms of one job, with Luke, that requires a more work, but higher income while the other job provides more leisure activities. In this section, it helps students to realize that leisure has value similar to income and decisions makers are willing to give up income in exchange for leisure.
See more: employment, income leisure tradeoff, indifference curves, labor, leisure, nonpecuniary benefits, preferences, tradeoffs, wages