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5202.0 - Spotlight on National Accounts, May 2014  
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  • Explanatory Notes

EXPLANATORY NOTES


THE PRODUCTION BOUNDARY AND UNPAID WORK IN THE 2008 SYSTEM OF NATIONAL ACCOUNTS

Production boundary

1 International guidelines for compiling the System of National Accounts are currently dictated by the System of National Accounts 2008 (2008 SNA). In the 2008 SNA, the general production boundary is defined as encompassing all activities carried out under the control and responsibility of an institutional unit that uses inputs of labour, capital, and goods and services to produce outputs of goods or services. (2008 SNA, para. 6.24) Most unpaid work falls within this definition. The SNA production boundary however, is more restrictive than the general production boundary. The SNA production boundary is defined by 2008 SNA as including the following activities: (2008 SNA, para. 6.27)

      1. The production of all goods or services that are supplied to units other than their producers, or intended to be so supplied, including the production of goods and services used up in the process of producing such goods or services;
      2. The own-account production of all goods that are retained by their producers for their own final consumption or gross capital formation;
      3. The own-account production of knowledge-capturing products that are retained by their producers for their own final consumption or gross capital formation but excluding (by convention) such products produced by household for their own use;
      4. The own-account production of housing services by owner occupiers; and
      5. The production of domestic and personal services by employing paid domestic staff.

2 Therefore, SNA excludes from production all own-account production of services (which are the equivalent of unpaid household work as defined in this paper) within households, other than housing services produced by owner occupiers, and the production of services by employing domestic staff. SNA also omits from production the value of volunteer and community work that is provided free by household to non-profit institutions or to other households. (2008 SNA, 19.39 & 29.156)


Unpaid Household Work (Own-account production of household services)

3 Below is a list of services outlined in 2008 SNA paragraph 6.28, for which no entries are recorded in the SNA when they are produced by household members and consumed within the same household:
      1. The cleaning, decoration and maintenance of the dwellings occupied by the household, including small repairs of a kind usually carried out by tenants as well as owners;
      2. The cleaning, servicing and repair of household durables or other goods, including vehicles used for household purposes;
      3. The preparation and serving of meals;
      4. The care, training and instruction of children;
      5. The care of sick, infirm or old people; and
      6. The transportation of members of the households or their goods.

4 2008 SNA recognises that in most countries, a considerable amount of labour is devoted to the production of household services for consumption within the same household, but gives the following reasons for not imputing values for these services for inclusion in the System of National Accounts as production: (2008 SNA 6.29)
      1. The own-account production of services within households is a self-contained activity with limited repercussions on the rest of the economy. The decision to produce a household service entails a simultaneous decision to consume that service. This is not true for goods.
      2. As the vast majority of household services are not produced for the market, there are typically no suitable market prices that can be used to value such services. It is therefore extremely difficult to estimate values not only for the output of the services but also for the associated incomes and expenditures that can be meaningfully added to the values of the monetary transactions on which most of the entries in the accounts are based.
      3. With the exception of the imputed rental of owner-occupied dwellings, the decision to produce services for own consumption is not influenced by and does not influence economic policy because the imputed values are not equivalent to monetary flows. For example, changes in the levels of household services produced do not affect the tax yield of the economy or the level of exchange rate.


Volunteer and Community work

5 In looking at the relationship of volunteer and community work to 2008 SNA's boundary of production, several points must be noted. First, such work can be undertaken by an individual or group of individuals acting on their own initiative. Alternatively, such work can be done by non-profit institutions serving households (NPISHs). NPISH are defined as non-profit institutions (excluding government organisations) that provide goods and services to households free or at prices which are not economically significant. The output of NPISHs is recorded in the National Accounts and is valued at its costs of production. (2008 SNA, para. 19.36). The relevant costs of production are compensation (including wages) of employees of the NPISHs, consumption of fixed capital (depreciation), and taxes payable on the production of the NPISHs less subsidies receivable on that production. Whilst the cost of labour of those who work for a NPISH in return for remuneration (whether it be monetary or in kind) is recorded within SNA, no imputation is included for the services of staff who are purely voluntary. (2008 SNA, para. 19.39)

6 Although such unpaid voluntary and community work falls within the scope of the general production boundary as defined in 2008 SNA, it, like unpaid household work, is excluded from the conventional measures of production. The value of volunteer and community work calculated in this study encompasses unpaid work done for NPISHs as well as volunteer and community services provided by individuals or groups of individuals directly to other households.


Unpaid Work and Satellite Accounts

7 2008 SNA recommends that the boundary of production could be extended by incorporating unpaid household work, and volunteer and community work in so-called Satellite accounts. (2008 SNA, para. 29.143-29.161) These are accounting statements which are separate from, but consistent with, the existing System of National Accounts. They provide supplementary information which can be used in conjunction with the data in the main accounts. The timing, frequency and quality of such accounts would depend on the availability of appropriate data and the resolution of what are regarded internationally as very difficult methodological issues. Although much research has gone into the issue of measuring total unpaid work, there are at present no established international guidelines. However, the statistical office of the Commission of European Communities (Eurostat) has published a proposed methodology for a satellite account of household production, initially in their 1999 publication Proposal for a Satellite Account of Household Production, which was followed up by the 2003 paper Household production and consumption - Proposal for a Methodology of the Household Satellite Accounts. Also of relevance is the work of the Conference of European Statisticians Bureau which conducted an in-depth review of time-use surveys, a key data source for compiling unpaid work statistics. This led to the task force developing the Guidelines for harmonizing time-use surveys, published in December 2013.


DEFINITION AND SCOPE OF UNPAID WORK

8 A prerequisite for the measurement of total unpaid work is a satisfactory definition of what constitutes such work. The boundary between productive and non-productive activity is not clearly distinguishable in many cases. For example, the distinction between unpaid work and leisure is often very difficult to draw.

9 A widely accepted principle for determining the scope of total unpaid work is the ‘third person’ or ‘market replacement’ criterion originally presented by Margaret Reid in 1934. Reid is re-quoted in many works on the topic of household production and implicitly mentioned in 2008 SNA in paragraph 6.16. In Economics of Household Production, Reid defines household production as:
      [consisting] of those unpaid activities which are carried on, by and for the [household] members, which activities might be replaced by market goods, or paid services, if circumstances such as income, market conditions, and personal inclinations permit the service being delegated to someone outside the household group.

Under this criterion, a household activity would be considered unpaid work if an economic unit, other than the household itself, could have supplied the latter with an equivalent service.

10 Arguments can be made for and against the inclusion of some of the activities that would qualify as unpaid work under Reid's third person criterion. Many household activities that meet the Reid criterion, for example cooking and shopping, could be considered leisure activities in a number of circumstances. In Australian studies, travel to/from work has been excluded from unpaid work because it is not possible to hire someone to travel to work on one's behalf and it is also clearly associated with paid employment rather than household production. Work done from home in relation to paid employment (for example, telephoning clients) which is unpaid but frequently a necessary part of the job, has been classified with paid activities and excluded from estimates of unpaid work. The unpaid assistance provided by relatives and others in family businesses has also been excluded, as the value added by such activities is already included in production as measured by the ASNA

11 Caring for others, for example playing with children, from some perspectives is a debatable inclusion in unpaid household work, even though it satisfies the third person criterion. Individuals perceive the status of these activities differently. Some people would view the raising of children as unpaid work, while others would view it as something more akin to leisure. Some would argue that these caring activities should not be classified as work or leisure but something else - they are activities that satisfy biological and cultural codes of behaviour to ensure desirable outcomes for the whole of society. Despite these reservations, this paper includes caring in the scope of unpaid work. However, the ABS recognises that the distinctions between paid work, unpaid work, and leisure, are still subject to world-wide debate and refinement.

12 Unpaid work is defined in this paper as comprising unpaid household work, and volunteer and community work. The following list gives an indication of the activities included under various categories of unpaid work.
  • Domestic work has been classified into broad groups as follows:
      • Food preparation and clean-up: includes the cooking and serving of meals, and washing dishes.
      • Laundry and clothes care: includes washing, ironing, mending and making clothes.
      • Other housework: includes cleaning the bathroom/toilet, vacuuming, dusting, and tidying.
      • Grounds care: includes gardening, lawn care, and pool care.
      • Animal care: includes feeding and tending to animals.
      • Home maintenance: includes repairs or improvements to the home, equipment, and motor vehicles, and heat/water/power upkeep.
      • Household management: includes paperwork, bills, budgeting, organising, packing, selling household assets, and disposing of rubbish.
  • Child care: includes the physical, emotional and educational care of children alongside general interaction with, and supervision of, children.
  • Shopping: includes the purchasing of a wide range of goods and services for people in the household - purchasing durables, consumer goods, and repair services, administration services, child care, domestic, and gardening services etc.
  • Volunteer and community work: includes the physical care of adults, helping/doing favours for others outside of the household, and the active involvement in various forms of unpaid voluntary work.
  • All communication and travel associated with the above mentioned unpaid work activities are also included within the scope of unpaid work.


VALUATION METHODS

13 In literature, two basic approaches to measuring unpaid work are identified: an output approach and an input approach.

14 The output approach would see unpaid work valued directly. The output of household production would be valued by multiplying the volume of household output for different activities by the market-equivalent prices for each service. This approach is in line with the method used to value output for own final use within the 2008 SNA. (2008 SNA, para 6.124) As the data requirements for the output based approach (data on the quantity of household services produced and the corresponding market- equivalent prices) are not readily available for most statistical agencies, including the ABS, unpaid work studies are more commonly conducted using an input approach.

15 The input approach involves valuing output in terms of the total cost of production and requires information about the time spent on household work. The input approach is similar but not identical to the approach adopted in 2008 SNA for valuing other non-market output (2008 SNA 6.130) for example, non-market services produced by government. In the System of National Accounts, non-market output is valued using all relevant costs of production; compensation of employees, the cost of purchased goods and services used in production (intermediate consumption), other taxes (less subsidies) on production, and consumption of fixed capital. While the same costs of production could be considered in valuing unpaid work, in practice, estimates of unpaid work are typically compiled using only the labour input component, as this is more easily achievable. Measuring unpaid work based purely on the inputs of unpaid labour, is the method most frequently used, and also the approach taken by ABS.

16 There are two broad approaches to the labour costs only, application of the input method.
  • The market replacement cost approach - estimates measuring what it would cost a household in wages, to hire others to do the household work for them.

      Within the market replacement cost approach, three separate estimates are distinguished:
        • Individual function replacement cost approach;
        • Housekeeper replacement cost approach; and
        • Replacement cost hybrid approach.
  • The opportunity cost approach - estimates measuring the amount that a household member would have earned in wages had they spent the same amount of time on paid work as actually spent on unpaid work.
      Two variants of the opportunity cost approach are compiled:
        • Gross opportunity cost approach; and
        • Net opportunity cost approach.

17 Each of these approaches is discussed in detail in the following subsections. Algebraic models of the approaches are also provided. The ABS recommends the market replacement cost approaches in preference to the opportunity cost approaches. However, estimates based on opportunity cost have continued to be derived to allow for international comparisons and to illustrate the extent to which the estimated value of unpaid work depends on the valuation method applied.


Individual function replacement cost

Definition and underlying principle

18 The individual function replacement cost approach assigns values to the time spent on unpaid work by household members according to the cost of hiring a market replacement for each individual function. Thus, for example, time spent on cleaning is valued using a rate of pay for a commercial cleaner, and time spent on child minding is valued according to the rate of pay for a child care worker. This method is based on the key assumption that household members and market replacements are equally productive in their work activities.

Issues with the method

19 It is not easy to determine an appropriate market rate of pay for household activities because commercial rates may embody a level of skill, responsibility or capital not required or reflected in household work. For example, it would obviously be inappropriate to value the time spent on all household cooking at the wage rate paid in the market to professional chefs. The application of commercial wage rates is also inappropriate where there are differences in productivity between households and the market sector due to economies of scale or the availability of expensive equipment in commercial operations.

20 The estimates derived using the market replacement cost approaches will underestimate or overestimate the contribution of unpaid work to GDP depending on the relationship between the productivity of households and the market sector. If households and market producers are equally productive, that is, if they have the same average output per hour, the market replacement cost approaches undervalue unpaid work by ignoring the contribution of non-labour inputs (e.g. capital). If households are more productive, the market replacement cost approaches further understate the value of unpaid work because a household will do more work in a given time than a replacement would. If, on the other hand, households are less productive, (if they have, for example, access to less capital or technology), the estimates will be too high because they will be derived by multiplying market wages by a longer period of time than it would have taken someone in the market to the same amount of work.

21 For children aged 15-18 years (who are in scope of this study) the market wage rate is theoretically too high to use because they generally receive juvenile wages. However, the resulting over-estimation is likely to be insignificant as this group performs relatively little unpaid work. This issue is also relevant to the other valuation approaches in this study.

22 Two questions concerning the choice of an appropriate average wage concept are frequently raised in the literature:
  • Whether gross or net wages are most appropriate?
  • Whether actual or paid working time should be used?
For most methods there is no precise prescription and limited consensus among researchers. However, it is noted that the choice of a wage rate is very important, as the calculated value is directly dependent on this choice and can vary significantly depending on that choice.

23 Concerning the first question, it is necessary to define what is meant by gross and net wages. Gross wages include social security contributions and income tax paid by the employer and employee, which in many cases may represent a significant portion of the total wage depending on the country and the nature of the welfare system. These two components should obviously be deducted in arriving at a net wage figure. The deduction of other components, such as work-related expenses, is more problematic.

24 Eurostat, in their 2003 paper Proposal for a Methodology of Household Satellite Account, present the advantages and disadvantages of using either gross or net wages. While the paper does not favour one over the other, it does acknowledge that net wages do have certain advantages from a theoretical point of view; however, net wage statistics are generally not available on an occupational basis.

25 Regarding the second question, use of actual or paid working time, the latter is determined by law or collective agreements, and includes paid holidays and paid sick leave. Actual working time refers to the time spent actually working and includes paid and unpaid overtime but excludes public holidays and weekends (except in cases where a worker does work at those times).

Application in this paper

26 In choosing wage rates, it has been assumed that the replacement workers are full-time, non-managerial workers. In most cases the unpaid work activity groups have to be matched to several occupations, each of which entails tasks involved in the matched household activity. In practice it is difficult to identify exact matches between unpaid work activities and occupations. The allocation of occupations to household activity used in this paper is provided in the section covering wage rates (see paragraph 69).

27 In this paper, valuations are based on male and female, and person wage rates. This means that estimates identified as being compiled using male and female wage rate are valued by applying male wage rates to activities performed by males, and a female wage rate applied to activities performed by females. Estimates identified as being compiled using person wage rates are based on applying the same person wage rate to activities conducted by men and to those conducted by women. For the ABS, the use of male and female wage rates, rather than person wage rate is conceptually preferable as it takes into account the potential divergences in the wage rates received by males, and females.

28 In the Australian compilation of unpaid work statistics, a gross wages concept was preferred. In any event, net wage data were not available. The gross wage figure used is based on weekly ordinary time earnings, which is inclusive of cash wages and salaries, and related income tax. It does not include social security contributions (i.e. superannuation and worker compensation), as such data are not available in Australia by occupation on a per-hour per-employee basis. This point is applicable to all valuation methods, except for the net opportunity cost method.

29 In this study the concept of paid working hours has been used. Hourly wage rates were obtained by dividing weekly ordinary-time earnings by ordinary-time hours paid for. 'Ordinary-time hours paid for' refers to employees' award, standard or agreed hours of work that are paid at the ordinary-time rate. It includes stand-by or reporting-time hours that are part of standard hours of work, and any part of annual leave, paid sick leave or long service leave taken during the reference period, but excludes overtime. This point is applicable to all valuation methods.


Housekeeper replacement cost

Definition and underlying principle

30 The housekeeper replacement cost approach values the time spent on unpaid household work by household members according to the cost of hiring a housekeeper to undertake the tasks. The key assumption underlying this approach is that household members and housekeepers are equally productive in performing household work.

Issues with the method

31 The underlying assumption of this method may or may not be true. For example, a housekeeper is likely to be more productive at cleaning than a household member who may also be looking after small children at the same time. Alternatively, a housekeeper may clean more quickly but less thoroughly than the household member. Use of this approach also assumes that there is a well-established labour market for persons who undertake all household tasks, which is not the case in Australia in the 1990s and 2000s.

Application in this paper

32 In this paper, housekeeper replacement cost estimates for 1992 are based on the wage rate of the occupation category 8915 Domestic housekeeper as outlined in the Australian Standard Classification of Occupations (ASCO) first edition. As ASCO released a second edition in 1997, in which occupation codes were revised, the estimates for 1997 and 2006 are based on the wage rate of category 8313 Domestic housekeeper. Further implications of the updated of the ASCO upon this paper can be found in the section below pertaining to wage rates (see paragraph 70).

33 The tasks identified as being performed by a Domestic housekeeper in both versions of ASCO, included:
  • Preparing, cooking and serving meals and refreshments;
  • Purchasing food and household supplies;
  • Washing dishes, kitchen utensils and equipment;
  • Sweeping and washing floors and vacuuming carpets, curtains and upholstered furnishings;
  • Dusting and polishing furniture, and cleaning mirrors, bathrooms and light fixtures;
  • Washing and ironing garments, linen and household articles; and
  • Changing linen and making beds.
The housekeeper wage rate was used to value all unpaid household work activities including those that would not normally be undertaken by a housekeeper.

34 Estimates for the three years are compiled using a person wage rate for a domestic housekeeper as a gender breakdown of the wage rate was not available for all necessary years.

35 The housekeeper replacement cost approach is only applicable to the derivation of the value of unpaid household work and does not apply to the derivation of the value of volunteer and community work. In this paper, estimates of the value of total unpaid work under a housekeeper replacement cost heading are derived by adding estimates of unpaid household work compiled using the housekeeper replacement cost approach, to estimates of volunteer and community work compiled using the individual function replacement cost approach, based on person wage rate.


Replacement cost hybrid

Definition and underlying principle

36 The replacement cost hybrid method is an attempt to refine the housekeeper replacement approach, whereby activities normally carried out by a housekeeper are valued using housekeepers wage rate, and those activities not within a housekeeper's job description are valued according to the individual function replacement approach. This is an attempt to better represent the actual outside employment a household would get in to complete activities categories as household work in this study.

Issues with the method

37 The issues outlined above for the individual function, and housekeeper replacement cost methods, are both applicable to the replacement cost hybrid method.

Application in this paper

38 For this approach the housekeeper wage rate was applied to those activities normally carried out by a housekeeper (activity categories: food and drink preparation and clean up, laundry, ironing and clothes care and other household work). The value of tasks not normally undertaken by a housekeeper were estimated using the wage rates applied in the individual function replacement cost approach (activity categories: gardening, lawn care and pool care, pet care, home maintenance, household management, associated communication, associated transport, child care, purchasing, and all volunteer and community activities).

39 The hybrid approach would appear to be appropriate for the Australian situation given that Australians typically hire housekeepers to clean house interiors, manage laundry and occasionally prepare meals, while they hire specialists to carry out child care, household maintenance, and gardening tasks.


Gross opportunity cost

Definition and underlying principle

40 The gross opportunity cost approach values unpaid work in terms of the earnings assumed to be foregone by household members when they devote time to unpaid work rather than paid employment. The approach is based on the assumption that the value of time spent doing unpaid work at home or in the community, equals its 'opportunity cost' elsewhere, i.e. the valuation of the next best alternative use of time. The assumption is made that the worker has given up paid work in order to perform unpaid work and that its value per hour is equal to the individual's marginal hourly wage in the market. In other words, to do an extra hour of unpaid work, an hour of paid (market) work is given up.

Issues with the method

41 There are many problems with this approach. Some particular reservations are outlined below.
  • Labour market structures - the gross opportunity cost approach does not represent the way the choice between paid and unpaid work is made. Most workers have limited choice in the short run regarding the hours they have to work and few have the option to refuse overtime.
  • Employment status - this method does not hold up well when patterns of labour force participation other than a rigid fixed-hours working week are considered.
  • ‘Psychic income’ - a probably un-quantifiable but theoretically precise valuation would take account of the worker's net psychic income from doing unpaid work and from doing paid work, i.e. where the net psychic benefit equals the psychic benefit from doing unpaid work minus the psychic benefit from paid employment.
  • Relevance of market wage rates for individual workers - the question is how is the 'foregone wage' to be determined when an unpaid household worker has had no market employment and therefore an indeterminable potential wage?

42 In view of the above discussion, the opportunity cost approach will give useful results only if very strict and probably implausible assumptions apply:
  • at the margin, time devoted to unpaid work precludes market work;
  • the value of time at the margin is the gross hourly wage; and
  • the average potential hourly earnings of the not-employed are equal to the average hourly earnings of the employed.

Application in this paper

43 In Australian studies, estimates of unpaid work using the gross opportunity cost approach have been produced using economy-wide average male, female, and person wage rates.


Net opportunity cost

Definition and underlying principle

44 The net opportunity cost method is a refinement of the gross opportunity cost approach, which attempts to find the appropriate and most realistic net wage rate to represent the true opportunity cost of an individual when they undertake unpaid work. This approach applies a wage rate that reflects the decision to undertake paid work, as an alternative use of time to unpaid work, would reasonably depend on the after tax remuneration (wages and salaries, superannuation, and fringe benefits) received. The rationale behind this approach is that the unpaid worker will be equating the value of doing unpaid work with the net benefit of working in paid work conferred by this 'adjusted' hourly wage rate.

Issues with the method

45 Ideally, a number of other factors should also be taken into account in determining a net wage figure, if it were possible to measure them, but this would be an enormous task. For example, there is the question of whether tax rebates and social security benefits should be taken into account. In the Australian context these include family allowances, family income supplements, medical insurance rebates, and a variety of means-tested welfare programs. Another element to take into account would be work related expenses that an individual would likely have to pay in order to undertake paid work (i.e. dry cleaning bills, professional association subscriptions, transportation costs etc.). Indeed, the net opportunity cost of working in the paid work force could well be negative in some cases.

Application in this paper

46 In this paper, net opportunity cost estimates were based on a wage rate derived by subtracting from average annual ordinary time earnings figure (based on the wage rate used in the gross opportunity cost method), the relevant income tax and Medicare levy payable, and adding the imputed employer on-costs relating to superannuation and fringe benefits. Net opportunity cost is compiled for persons only, as a gender breakdown of all the required data components was not available. Additionally, as superannuation and fringe benefit data was not available on an occupational basis, an economy-wide average per-person figure was applied.


Algebraic Models

47 The various methods for valuing unpaid work can be represented in algebraic terms. The algebraic model for each methodology is presented below. These models are the same for each of the three years except for the calculation of number of hours. As 1992 was a leap year, instead of multiplying by 365 this should instead be 366 in the equation, representing the additional day experienced in 1992.


Number of hours

48 Estimates of the number of hours spent on unpaid household work per person in Australia were derived as follows:
Equation - number of hours Hij = open bracket MDij divided by 60 close bracket multiplied by 365
    where
      Equation - number of hours Hij= average hours in year spent on unpaid work function Equation - number of hours i per person in demographic group Equation - number of hours j
      Equation - number of hours MDij= average daily minutes on work function Equation - number of hours i per person in demographic group Equation - number of hours j


Individual function replacement cost

49 The individual function replacement cost method estimates for Australia were derived as follows:
Equation - individual function replacement cost
    where
      Equation - individual function replacement cost UWAifr= individual function replacement cost estimate for unpaid work
      Equation - individual function replacement cost Hij= average hours in year spent on unpaid work function Equation - individual function replacement cost i per person in demographic group Equation - individual function replacement cost j
      Equation - individual function replacement cost PAj= number of persons in Australia in demographic group Equation - individual function replacement cost j
      Equation - individual function replacement cost Wij= average hourly rate of pay applicable to unpaid work on function in demographic group Equation - individual function replacement cost j


Housekeeper replacement cost

50 For the housekeeper replacement cost method the following algebraic form was used:
Equation - Housekeeper replacement cost
    where
      Equation - Housekeeper replacement cost UWAhrc= housekeeper replacement cost estimate for unpaid household work
      Equation - Housekeeper replacement cost Hj= average hours in year spent on unpaid household work functions per person in demographic group Equation - Housekeeper replacement cost j where
    Equation - Housekeeper replacement cost Hj
      Equation - Housekeeper replacement cost PAj= number of persons in Australia in demographic group Equation - Housekeeper replacement cost j
      Equation - Housekeeper replacement cost Wh= average hourly rate of pay applicable for housekeepers


Replacement cost hybrid

51 The replacement cost hybrid method consists of the sum of two components, the first using the housekeeper replacement cost model, but restricted to those activities typically performed by a housekeeper, and the second using individual function replacement cost method, based on person wage rates, for the rest of the activities within scope.


Gross opportunity cost

52 The algebraic form of the gross opportunity cost method is as follows:
Equation - Gross opportunity cost
    where
      Equation - Gross opportunity cost = gross opportunity cost estimate for unpaid work
      Equation - Gross opportunity cost = average hours in year spent on all unpaid work functions per person in demographic group Equation - Gross opportunity cost where
Equation - Gross opportunity cost
      Equation - Gross opportunity cost = number of person in Australia in demographic group Equation - Gross opportunity cost
      Equation - Gross opportunity cost = gross opportunity cost average hourly rate of pay for demographic group Equation - Gross opportunity cost


Net opportunity cost

53 The algebraic form of net opportunity cost method is as follows:
Equation - Net opportunity cost
    where
      Equation - Net opportunity cost= net opportunity cost estimate for unpaid work
      Equation - Net opportunity cost= average hours in year spent on all unpaid work functions per person in demographic group Equation - Net opportunity cost where
Equation - Net opportunity cost
      Equation - Net opportunity cost= number of person in Australia in demographic group Equation - Net opportunity cost
      Equation - Net opportunity cost= net opportunity cost average hourly rate of pay applicable for demographic group Equation - Net opportunity cost


DATA SOURCES AND ASSOCIATED ISSUES

54 The preparation of estimates of total unpaid work presented in this paper required the following figures:
  • Average time spent on unpaid work activities;
  • Number of persons;
  • Wage rates; and
  • GDP

Time Use Survey

55 The Time Use Survey (TUS) was the principal statistical base for deriving the estimates of the value of unpaid work. TUSs record the time spent by people on different kinds of activities. TUS data by activity can be classified by demographic, socioeconomic and other personal characteristics. The ABS conducted national TUSs in 1992, 1997 and 2006, each of which form the basis of the respective yearly unpaid work estimates in this paper. In each TUS, respondents were requested to complete a questionnaire, and to provide detailed information on daily time use by keeping a diary covering two successive days. In order to take account of the seasonal impact upon time use, the survey was conducted during each quarter of the year. The table below lists the four survey periods for each TUS:

TABLE 1. TUS COLLECTION PERIODS, for 1992,1997, and 2006

1992 TUS 1997 TUS 2006 TUS

Collection periods 24 February - 7 March 1992 27 January - 8 February 1997 20 February - 4 March 2006
25 May - 6 June 1992 21 April - 3 May 1997 24 April - 6 May 2006
28 September - 10 October 1992 23 June - 5 July 1997 26 June - 8 July 2006
23 November - 5 December 1992 27 October - 8 November 1997 23 October - 4 November 2006



56 The scope of the survey was restricted to persons aged 15 years and over. It covers the usual residents of private dwellings in urban and rural areas across all States and Territories of Australia. Below is a list of exclusions that were made for conceptual and operational reasons to the 2006 TUS.
  • Households which contain members of non-Australian defence forces stationed in Australia;
  • Households which contain diplomatic personnel of overseas governments;
  • Residents of non-private dwellings (e.g. hotels, hospitals); and
  • Households in collection districts defined as very remote or Indigenous Communities.

Although the specific exclusions applied in each TUS differ very slightly, the listed exclusions made to the 2006 TUS is largely representative of those applied to the three different TUS. More information about specific exclusions for 1992 and 1997 can be found in ABS publications Time Use Survey, Australia - Users’ Guide 1992 (cat. no. 4150.0) and Time Use Survey, Australia - Users’ Guide 1997 (cat. no. 4150.0).

57 The final sample of the 2006 TUS included 5,726 households, an increase on the 1997 sample of 4,555 households, and the 1992 sample of 4,400 households.

58 Separate lists are provided below indicating which TUS time-use classifications/activities were included in this paper as unpaid household work, and volunteer and community work activities. Only TUS activities classified as being primary activities were included in this study, noting that the TUS also collects data on secondary activities performed. An example of the distinction in this activity classification can be seen in the scenario of washing dishes whilst passively minding a child. Time spent washing dishes would be categories as a primary activity, and so included in this study, and the passive child minding would be secondary therefore outside of the scope of this paper. For more detailed information on the coding of primary and secondary activities see the ABS publication Time Use Survey: User Guide - 2006 (cat. no. 4150.0) - Diary processing.

The TUS activity codes selected for use are different between 1992 and 1997/2006. This is largely due to the introduction of a new activity classification system in the 1997 TUS.

TABLE 2. UNPAID HOUSEHOLD WORK ACTIVITIES AND CORRESPONDING TUS ACTIVITY CODES

Unpaid Household Work Activities ABS 1992 Time Use Codes ABS 1997 and 2006 Time Use Codes

Food and drink preparation 110-111 410-413
Food and drink clean-up 112-113 414-415, 419
Laundry, ironing and clothes care 120-126, 129 420-427, 429
Other household work 100, 130 400, 430-434, 439
Gardening and lawn care 141-142 441-443
Cleaning grounds, pool care etc. 140, 143-144, 149 440, 444-445, 449
Pet care 145 446
Home maintenance 150-155, 157, 159 450-457, 459
Household management 160-164, 169 460-469
Child care 20-25, 29 500, 510-512, 521, 531, 541, 551, 599
Purchasing 300, 310-314, 319-322, 327, 329 600, 610-612, 619-622, 625-626, 629, 699
Associated Communication 17, 19, 27, 37 471, 499, 571, 671
Associated Travel 18, 28, 38 481, 581, 681



59 The time-use classifications used for volunteer and community work are shown below.

TABLE 3. VOLUNTEER AND COMMUNITY WORK ACTIVITIES AND CORRESPONDING TUS ACTIVITY CODES

Volunteer and Community work activities ABS 1992 Time Use Codes ABS 1997 and 2006 Time Use Codes

Adult care 610-612 710-711
Volunteer work 600, 620, 630-632 700, 721, 731, 799
Associated Communication 67 771
Associated Travel 68 781



60 With each subsequent edition of the TUS, changes have been introduced to improve the surveys quality. Although it is noted that these changes may impact upon the comparability of estimates between years, a high degree of conceptual comparability has been retained. A detailed list of all changes between editions of the Australian TUSs, can be found in the 1997 and 2006 editions of Time Use Survey: Users Guide (cat. no. 4150.0).

61 Of main concern to this paper, was the previously mention adoption of a more sophisticated activity classification and coding system with the 1997 TUS. This redevelopment of the TUS saw the inclusion of a 'for whom' column added to the diary which provided additional information on the purpose of activities. This enabled a more accurate identification of unpaid work activities between unpaid household work, and volunteer and community work. For example, in the 1997 and 2006 TUSs, an activity described as cooking 'for volunteer firemen' reported in the 'for whom' column, was classified as voluntary work. Without the information about the purpose of the cooking, the activity would have been classified according to the nature of the activity; therefore it would have been treated as unpaid household work in the 1992 TUS. This has resulted in the data for 1997 and 2006 being coded according to purpose basis, whereas the 1992 data used is coded according to a nature basis. This change in coding classification is likely to have resulted in more activities in the 1992 TUS being coded to unpaid household work, that may have been coded to voluntary work had the 1997 and 2006 classification been used. For this reason, caution should be taken when comparing the 1992 estimates produced in this paper to those of 1997 and 2006.

62 To allow comparisons across time, the ABS has compiled a concordance of estimates for Time Use data for the three years. This is published in table 1 and table 2 of the downloadable data cube of How Australians Use Their Time, 2006 (cat. no. 4153.0). However, in this paper Time Use estimates based on nature (1992) and purpose classifications (1997 and 2006) were used instead. As the primary aim of this study was to produce the most accurate estimate for each individual year, opposed to estimates aimed at a time series focus of analysis, using TUS data on this basis was believed to be more suitable. As a consequence, caution should be exhibited in comparing estimates of unpaid work across years due to the differences in coding for Time Use data, particularly between 1992, and 1997 and 2006.

63 It should be noted that due to how this paper has derived the required estimates of average weekly hours, despite these figures being compiled using TUS data, the values quoted throughout this paper will differ slightly to those published in How Australian Use Their Time (cat. no. 4153.0).


Wage Rate Data

64 The wage rates used in this paper were compiled using the wage rates for males, females, and persons, based on the publication Employee Earnings and Hours, Australia (cat. no. 6306.0). The wage rates published in cat. no. 6306.0 were collected by the Survey of Employee Earnings and Hours, which is a sample survey of employers. This survey is designed to provide detailed statistics on the composition and distribution of employee earnings and hours paid for. It includes an occupational breakdown of information based on ASCO classifications. For detailed information pertaining to the scope and methodology of the Survey of Employee Earnings and Hours please see Labour Statistics: Concepts, Sources and Methods, 2006 (cat. no. 6102.0.55.001).

65 For all unpaid work valuation approaches, hourly wage rates were calculated using the average weekly ordinary time earnings and the hours paid for, for a full-time adult non-managerial employee. The ABS notes that work could be undertaken for future unpaid work studies to develop a more sophisticated approach to wage rates used for activities such as child care and adult care, to better reflect the additional burden outside of standard working hours including weekends for such activities, instead of using the average weekly ordinary time earnings figure currently used.

66 Because Employee Earnings and Hours data is only available biennially from 1996, the relevant wage rates for May 1996 and May 1998 were selected and averaged to give estimated wage rates for 1997. Data from the May 1992, and May 2006 publications were used for 1992 and 2006 unpaid work estimates respectively.

Individual function replacement cost and relevant aspects of the Hybrid replacement cost

67 For the purpose of compiling unpaid work data, only a selection of occupational wage rates were used. The ABS selected the appropriate occupation for use in its study based on the following rules:
  • First, the occupations chosen were those that would be directly affected by an increase in demand when a particular type of unpaid work was transferred to the market.
  • Of the occupations selected in the first step above, only those deemed most similar to the type of unpaid work under consideration were selected.

These rules were considered appropriate as it can be argued, for example, that if people start eating out more, demand for cooks and kitchen hands, whose work are most similar to the unpaid work of food preparation in the home, would increase.

68 If the selection process resulted in a group of occupations being matched to an unpaid work category, a weighted average of the earnings for each occupation in the group was taken, based on weights derived from the TUS activity data. This was possible because the TUS provides data at a detailed activity level, to which appropriate ASCO occupations could be allocated.

69 The matching of occupational wage rates taken from Employee Earnings and Hours (cat. no. 6306.0) to the various unpaid work activities is shown in the tables below. Information based on a 4 digit level of detail for ASCO occupations and corresponding wage rates were used. These wage rates provided the initial input to the individual function replacement cost approach, and for the unpaid work activities not usually carried out by a housekeeper for the hybrid replacement cost approach. For a number of household activities (denoted by ‘na’) female wage rates were not available so male wage rates were used in lieu. Additionally, in the few instances where neither male nor female rates were available, a person wage rate was used instead.

TABLE 4. 1992 TUS ACTIVITIES MATCHED WITH ASCO (version 1) OCCUPATIONS AND WAGE RATES

TIME USE
CODE
UNPAID WORK
ACTIVITY
ASCO
code
ASCO
description
Male
Female
Person
$/ hr
$/ hr
$/ hr

UNPAID HOUSEHOLD WORK

Food and drink preparation and clean up
110-111 Food and drink preparation 4703 Bakers/pastry chefs
11.78
10.01
11.51
4705 Cooks
12.57
11.67
12.25
4799 Other food tradespersons
11.90
12.22
11.98
8919 Kitchen hands
10.87
10.94
10.92
112-113 Clean-up 6505 Waiters & waitresses
11.65
10.16
10.63
8919 Kitchen hands
10.87
10.94
10.92
Laundry, ironing and clothes care
120-124,129 Laundry and ironing8917 Laundry workers
11.50
10.55
10.89
125-126 Clothes care 4911 Garment tradespersons
12.67
10.38
11.77
Other household work
100, 130 Other household work 8301 Cleaners
11.28
11.09
11.21
Gardening, lawn care and pool care
141-142 Gardening and lawn care 4805 Gardeners
11.09
11.60
11.11
140,143-144, 149 Cleaning grounds etc. 8913 Caretakers
12.80
na
12.77
Pet care
145 Pet care 4931 Animal trainers
13.82
na
13.82
8999 Other labourers & related workers
11.69
12.21
11.76
Home maintenance
150-151,153,159 Home improvement 4401 Carpenters & joiners
13.36
10.90
13.35
4405 Painters, decorators & sign writers
13.29
na
13.29
152,154-155 Furnishing and design 4913 Upholsterers & bedding tradespersons
11.00
na
10.91
157 Car care 4601 Vehicle mechanics
12.66
11.65
12.65
Household management
160-164,169 Household management 5301 Accounting clerks
15.14
12.91
13.54
5305 Statistical & actuarial clerks
15.14
13.50
14.21
5401 Supervisor, library & filing clerk
13.48
12.60
12.83
5499 Other filing, sorting & copying clerks
12.54
12.77
12.69
Child care
20-25,29 Child care 6601 Child care workers
14.62
11.89
12.29
6603 Enrolled nurses
12.94
13.30
13.25
2401 Pre-primary school teachers
20.38
13.91
14.56
5903 Teachers' aides
12.25
10.25
10.43
Purchasing
300,310-314,319-322,327,329 Purchasing of goods and services5505Stock & purchasing clerks
12.89
12.14
12.62
Associated communication
17,19,27,37 Associated communication 5101 Office secretaries & stenographers
15.86
13.56
13.81
Associated travel
18,28,38 Associated travel 7103 Automobile drivers
12.28
12.79
12.32

VOLUNTEER AND COMMUNITY WORK

610-612 Adult care 6603 Enrolled nurses
12.94
13.30
13.25
600, 620, 630-632 Volunteer work .. Average of all unpaid work occupations
13.01
12.00
12.35
67 Associated communication 5101 Office secretaries & stenographers
15.86
13.56
13.81
68 Associated travel 7103 Automobile drivers
12.28
12.79
12.32

na not available
. . not applicable

TABLE 5. 1997 AND 2006 TUS ACTIVITIES MATCHED WITH ASCO (version 2) OCCUPATIONS AND WAGE RATES

1997
2006
TIME USE
CODE
UNPAID WORK
ACTIVITY
ASCO
code
ASCO
description
Male
Female
Person
Male
Female
Person
$/ hr
$/ hr
$/ hr
$/ hr
$/ hr
$/ hr

UNPAID HOUSEHOLD WORK

Food and drink preparation and clean up
410-413 Food and drink preparation4513 Cooks
13.08
12.59
12.89
16.40
18.07
17.10
9931 Kitchen hands
13.04
13.36
13.22
17.56
18.30
18.01
414-415, 419Clean-up6323(a)
632(b)
Waiter(a)
Hospitality worker(b)
12.19
12.29
12.25
18.26
18.25
18.24
9931 Kitchen hand
13.04
13.36
13.22
17.56
18.30
18.01
Laundry, ironing and clothes care
420-424, 427, 429 Laundry and ironing8315 Laundry worker
12.44
11.48
11.80
15.28
15.20
15.23
425-426 Clothes care4941(a)
494(b)
Clothing trades person (a)
Textile, clothing & related tradesperson (b)
13.83
13.54
13.62
16.82
17.82
17.22
Other household work
400, 430-434, 439 Other household work9111 Cleaner
13.06
12.44
12.83
18.03
17.39
17.86
Gardening, lawn care and pool care
441-443 Gardening and lawn care4623 Gardeners
13.09
na
13.05
17.78
17.21
17.72
440, 444-445, 449 Cleaning grounds, pool care etc.8314 Caretaker
13.52
na
13.44
na
na
17.95
Pet care
446 Pet care6399 Other intermediate service workers
15.92
13.19
15.33
20.96
22.46
21.95
Home maintenance
450-451, 453, 459 Home maintenance9993 Handypersons
13.72
10.33
13.67
20.71
17.59
20.61
456 Upkeep9916 Construction & plumber's assistant
14.88
na
14.90
23.74
30.98
23.95
452, 454-455 Design and furnishing4942 Upholsterer & bedding tradespersons
13.56
na
13.46
na
na
16.05
457 Car/boat/bike car4211 Motor mechanic
14.60
11.90
14.57
na
na
20.98
Household management
460-463, 465-467, 469 General household management6111 General clerks
16.08
14.49
14.83
23.05
20.56
21.06
6141 Accounting clerks
17.01
15.06
15.70
22.42
20.23
20.80
6153 Stock & purchasing clerks
16.08
15.17
15.77
22.65
19.26
21.47
464, 468 Garbage disposal9991 Garbage collectors
14.15
na
14.40
22.26
na
22.26
Child care
500, 510-512, 521, 531, 541, 551, 599 Child care6312 Children's care workers
17.99
11.82
11.99
19.66
16.70
16.74
6314 Personal care & nursing assistant
14.30
13.90
14.04
19.89
17.41
17.86
2411 Pre-primary school teachers
17.51
19.00
18.89
na
27.27
27.27
6311 Education aides
13.93
13.57
13.61
20.77
18.26
18.43
Purchasing
600, 610-612, 619-622, 625-626, 629, 699 Purchasing6153 Stock & purchasing clerks
16.08
15.17
15.77
22.65
19.26
21.47
Associated communication
471, 499, 571, 671 Associated communication5111 Secretaries & personal assistants
16.71
15.97
15.99
25.59
22.37
22.50
Associated travel
481, 581, 681 Associated travel7313 Automobile drivers
14.54
na
14.59
18.23
na
18.23

VOLUNTEER AND COMMUNITY WORK

710-711 Adult care 6314 Personal care & nursing assistant
14.30
13.90
14.04
19.89
17.41
17.86
700, 721, 731, 799 Volunteer work .. Average of unpaid work occupations
14.57
13.58
14.12
20.09
19.57
19.83
771 Associated communication 5111 Secretaries & personal assistants
16.71
15.97
15.99
25.59
22.37
22.50
781 Associated travel 7313 Automobile drivers
14.54
na
14.59
18.23
na
18.23

na not available
. . not applicable
(a) Used for compilation of 1997 estimates.
(b) Used for compilation of 2006 estimates.


70 There is some variation in the occupations selected for 1992 in comparison with 1997 and 2006. This is due to the fact a second edition of ASCO was released in 1997, which Employee, Earnings and Hours (cat. no. 6306.0) first incorporated into its statistics with the release of its May 1996 publication. The update of ASCO was undertaken to reflect the widespread industry and award restructuring, technological change and competency-based approaches to career entry and progression that had occurred since ASCO was first published in 1986. There is a slight difference in occupational coding between the two versions. For the occupations relevant to this paper, attempts have been made to ensure the occupations selected align as close as possible between the years. The 1992 estimates are based on wage rates coded to the first edition of ASCO, and 1997 and 2006 estimates are based on the second edition. Information about ASCO version 1 and 2, including a concordance of the two versions, can be found in the ABS publication ASCO- Australian Standard Classification of Occupations, Second Edition, 1997 (cat. no. 1220.0).

71 Two occupations used in 2006 differ to those used in 1997 - clothing trades person and waiter. This is because wage rates at a 4-digit occupational breakdown were not available for these two occupations for 2006. A 3-digit occupational breakdown was used instead for these two items. (see (a) and (b) of table 5 above)

Housekeeper replacement cost and relevant aspects of the Hybrid replacement cost

72 As previously mentioned in paragraph 32 , wage rates for the Housekeeper replacement cost method were based on person wage rates for a Domestic housekeeper. The wage rates used for the Housekeeper approach, and for the relevant activities of a housekeeper for the Hybrid approach are shown in table 6 below.

TABLE 6. WAGE RATES OF DOMESTIC HOUSEKEEPERS, for 1992 (ASCO version 1) and 1997 and 2006 (ASCO version 2)

1992
1997
2006
ASCO code
ASCO description
Person
Person
Person
$/ hr
$/hr
$/hr

ASCO 1
8915
Domestic housekeeper
11.14
. .
. .
ASCO 2
8313
Domestic housekeeper
. .
11.44
17.59

. . not applicable


Opportunity cost

73 The hourly wage rates used for the opportunity cost approaches are shown in table 7.

TABLE 7. OPPORTUNITY COST WAGE RATES, for 1992, 1997, and 2006

1992
1997
2006



Male
Female
Person
Male
Female
Person
Male
Female
Person
$/hr
$/hr
$/hr
$/hr
$/hr
$/hr
$/hr
$/hr
$/hr

Gross opportunity cost
14.75
13.71
14.34
18.13
16.43
17.47
26.09
23.48
25.07
Net opportunity cost
. .
. .
12.02
. .
. .
14.64
. .
. .
21.20

. . not applicable


74 The gross opportunity cost rates are based on the economy-wide average occupational weekly ordinary time earnings divided by the corresponding hours paid for, for males, females, and persons as sourced from Employee Earnings and Hours, Australia (cat. no. 6306.0).

75 With respect to the net opportunity cost approach, the data sources are as follows: average weekly ordinary time earnings and hours worked were obtained from Employee Earnings and Hours, Australia (cat no. 6306.0), the same figure used for gross method; taxation and Medicare levy rates were obtained from the Australian Taxation Office; Employer-on costs (superannuation contributions and fringe benefits) were compiled using data from the Australian System of National Accounts, 2012-13 (cat. no. 5204.0), from which an economy-wide per-person average value was derived.


Population data

76 The population estimates for the three years covered in this paper were based on ABS monthly Labour Force Survey (LFS) estimates of the civilian population aged 15 years and over, classified by gender, marital status and labour force status. Estimates for 1992 are based on post 1996 Population Census benchmarks, 1997 estimates are based on post 2001 Population Census benchmarks, and the 2006 figures are benched to the 2006 Population Census. To better align with the scope of the TUS, excluded from the LFS civilian population estimates were persons in special dwellings (e.g. prisons, hospitals) and persons living in very remote and sparsely settled parts of Australia. The population estimates used in the paper were obtained by weighting the labour force data according to the number of days the TUS was conducted in each month of the four enumeration periods, listed previously in paragraph 55, for each year.

77 The table below outlines the population estimates used in this paper:

TABLE 8. POPULATION ESTIMATES, for 1992,1997, and 2006

1992
1997
2006

Total population
13 118 457
14 045 354
16 116 022


A detailed breakdown of the population estimates used in this study are available in the downloadable tables which accompany this paper.


National Accounts data

78 Figures of Gross Domestic Product (GDP) used in this paper were sourced from Australian System of National Accounts, 2012-13 (cat. no. 5204.0). The figures are current price estimates of GDP. Table 9 below lists the estimates of GDP used in this paper.

TABLE 9. GROSS DOMESTIC PRODUCT ESTIMATES, for 1997 and 2006

1997
2006
$million
$million

Gross Domestic Product
556 902
998 312



79 As previously mentioned, superannuation and fringe benefits figures, required for the net opportunity cost method, were also compiled using National Account data.

DIFFERENCE IN METHODOLOGY AND SOURCE DATA FROM PREVIOUS ABS UNPAID WORK PUBLICATIONS

80 It should be noted that the methodology and source data used to compile estimates in this paper are similar to that used in the 1999 publication of Unpaid work and the Australian economy, 1997 (cat. no. 5240.0), but differs to that applied in Occasional Paper: Measuring Unpaid household work, 1992 (cat. no. 5240.0), released in 1994. The estimates in this paper for 1992 and 1997 have been revised against those previously published by the ABS. This is because measures were undertaken by this study to ensure the estimates compiled for all three years were done so on the same basis to improve comparability between the years. Achieving this has resulted in the below listed differences in methodology and source data between this publication and the two previous papers on the topic.

81 The differences between the 1994 publication and this paper are listed below:
  • Figures compiled in 1994 were based purely upon person wage rates. Estimates in this paper are compiled using male and female wage rates in addition to person wage rates.
  • For the market replacement cost methods, in instances where more than one occupation suited the activity, the 1994 estimates were compiled by taking a straight average of these occupation wage rates. A more sophisticated approach was used in this paper based on weights using TUS data.
  • This paper includes the additional activity categories of associated communication and associated travel which the 1994 edition did not have.
  • Occupations used in this paper differ slightly to those used in the 1994 publication.
  • TUS activities selected for use in this paper have been refined slightly since the 1994 publication as certain previously included activities have been deemed to be outside of the scope of unpaid work. Activities that have since been excluded include window shopping, purchases of personal and medical services, and the emotional care of adults.

82 The only notable difference in methodology and source data between the 1999 publication and this paper, concerns the compilation of the net opportunity cost method:
  • The previous publication sourced superannuation and fringe benefit tax data from the ABS publication Labour Cost, Australia (cat. no. 6348.0). For this paper, these two data items were based on data from System of National Accounts (cat. no. 5204.0), as this was deemed to be a more appropriate source, for consistency reasons.
  • This paper has also removed the work related expenses element which was an additional measure taken into account in compiling the net opportunity costs wage rate in the two previous publications. This was done as the level of assumptions made in incorporating work related expense items was believed to be too high and did not enhance the estimates produced. Removing work related expense brings Australian estimates more in line with those produced by other statistical agencies, such as those quoted in this paper produced by the OECD in the publication Incorporating Estimates of Household Production of Non-Market Services into International Comparisons of Material Well-Being, which only accounts for taxes and social security contributions in their wage figures.


ACCURACY OF ESTIMATES: Sampling error and non-sampling error

83 As the source data used in this paper is collected by various ABS sample surveys, the accuracy of the results compiled are impacted by the two types of error that are always associated with sample survey: sampling error and non-sampling error:
  • Sampling error occurs because a sample, rather than the entire population, is surveyed.
  • Non-sampling error arises from inaccuracies in collecting, recording and processing the data. Every effort is made to minimise reporting error by the careful design of questionnaires, intensive training and supervision of interviewers, and efficient data processing procedures. Non-sampling error also arises because information cannot be obtained from all persons selected in the survey.

Although care has been taken to ensure the estimates of ABS sample surveys are accurate as possible, the potential influence of these factors should be taken into account when interpreting the results presented in this paper.

84 Information relating to the associated reliability for each survey used can be found on the ABS website accompanying each publication:

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