Marginal Value of Non-Work Time (MVT)
RCTField Experiment
Macroeconomic search models and benefit-cost analyses require direct measurement of how individuals value marginal leisure time across varying work schedules, but empirical estimates of non-work time valuation have historically been difficult to quantify directly [1, 2].
Picture this
Think of an individual's weekly hours as a battery that depletes progressively as work hours increase; trading away the first few hours of leisure costs very little, but trading away leisure time when already working full-time requires a substantially higher financial payout to compensate [3, 4].
What the evidence says
Mean hourly MVT rises monotonically from $4.80 for 5–10 hours/week to $8.95 for 20–25 hours/week, $12.00–$14.68 for 30–40 hours/week, and $21.89–$22.69 for 40–50 hours/week, yielding an average flow value of non-work time relative to pre-tax predicted market wage ($\tilde{z}$) of 0.58 ($s.e. = 0.04$) [11-13].
- Who was studied
- N = 1,152 unemployed job applicants (83% female, average age 32.7 years) across 80 U.S. metropolitan areas in the primary field experiment, alongside N = 2,354 choices from 785 respondents in the Understanding America Study [5-7].
- How
- Randomized field experiment offering real work-from-home job applicants discrete choices between two job options differing only in weekly hours and randomized hourly wages, evaluated using a logistic discrete choice model [8-10].
What to do
Estimate the baseline opportunity cost of full-time employment for unemployed jobseekers by multiplying their predicted pre-tax market wage by 0.58 [11, 14].
From the source
"For unemployed applicants, the average opportunity cost of a full-time job due to lost leisure and household production is approximately 60% of their after-tax marginal product, and approximately 72% when including fixed costs of employment and child care costs [3]."
Labor_Supply_and_the_Value_of_Non_Work_Time_Experimental_Estimates.pdf