Gary Becker modeled the process of home production in his 1965 theory of how people allocate time (Becker, 1965). There Becker posits that consumers combine time and other market commodities to produce “home goods.” We propose a class of “hybrid” goods. People (usually) produce hybrid goods partly through home production and partly using market production. We study one example of a hybrid good – a high-quality and educated child. We study whether and how parents use market goods (private academies, tutoring, paid childcare) and their own time to produce one. For the empirical analysis, we take advantage of labor market reforms in South Korea enacted in 2003 and 2018 that limited the statutory number and the maximum number of hours per week that firm managers could demand that employees work. We first study how much the labor market reform decreased the hours worked of affected parents and then examine how reduced work hours affected childcare use using panel data. We are interested if there is a substitution of market childcare with parental time. We exploit the fact that the government implemented the reforms over time by firm size and, to a more limited extent, across industries.

Accepted Oral Presentation