We study long-run trends in market hours of work and employment shifts across economic sectors driven by uneven TFP growth in market and home production. We focus on the structural transformation between agriculture, manufacturing and services and on the marketization of home production. The model can rationalize the observed falling or Ushaped pattern for aggregate hours, the shift from agriculture to services and balanced aggregate growth. We find support for the model?s predictions in long-run US data.

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August 2006     Paper Number CEPDP0746

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