Introducing Work Skills When Valuing Productive Nonmarket Labor Time

When valuing a person’s productive nonmarket labor time, such as in providing household services, the market wages of related occupations are used by many economists and researchers when employing the replacement cost or market alternative cost approach. For example, a person’s time spent cleaning the home might be valued using the wages of a housekeeper. The method involved in choosing the occupation(s), however, has been largely limited to looking at the occupation’s title and description. Very little attention has been given to other factors when determining the appropriateness of the occupation, such as prerequisite work skills. For decades, formal work skills have been required, defined, and relied upon by the U.S. Code of Federal Regulations, the U.S. Social Security Administration and the U.S. Department of Labor, and they are testified to regularly in Federal hearings by Social Security Vocational Experts. Unfortunately, work skills have not been well introduced to the field of economics. This situation will change as the data are now becoming increasingly available. The purpose of this paper is to: (1) provide forensic economists and others who value productive nonmarket labor time with an introduction to work skills analysis; and (2) assist forensic economists in their understanding of the appropriateness of occupations and wages when valuing productive nonmarket labor time using work skills analysis.