In this paper, we propose a method of determining the opportunity cost of leisure time with an empirical recreation demand application. Typically, the opportunity cost of leisure time is assumed to be some fraction of the wage rate. This practice has limitations. First , it assumes that individuals can trade time for money at their wage. Second, it offers no guidance as to how to value the time of an individual who is not in the labor force. This paper proposes a method of determining this cost that doesn't suffer from these drawbacks. An empirical example is provided which demonstrates the proposed approach and contrasts it with commonly applied approaches. Estimating the Cost of Leisure Time for Recreation Demand Models Recent articles dealing with time in recreation demand (Larson, 1993; McConnell, 1992) advocate the use of the wage rate as the cost of time. Utilizing the wage rate, or some fraction of the wage rate, as the cost of leisure time has been a standard practice for some time. In the early transportation literature, authors proposed deriving a percentage of the wage rate as a cost of time from empirical data (e.g., Beesley, 1965; Quarmby, 1967). Percentages of the wage rate were used in early recreation demand studies (e.g., Cesario, 1976) and continue to be used today (e.g., Bowker, et al., 1996). Other approaches, such as hedonic wage equations (Smith, Desvousges and McGivney, 1983) are occasionally employed, but dependence on the wage rate itself is the common practice. Early attempts to incorporate time into more general consumer theory (e.g., There is considerable evidence that under-employment and over-employment are common in the U.S. 1 workplace. Perlman (1966), Mossin and Bronfenbrenner (1967) and Altonji and Paxson (1988) document under-employment in the workplace. Ham (1982) found that unemployed and under-employed workers ranged from 19.2% in 1973 to 28.2% in 1970 (The University of Michigan's Panel Study of Income Dynamics from 1967 to 1974 was used in the analysis). On the over-employment side, Tarling (1987) claims that "Recent evidence indicates that many employees would be prepared to forgo some of their earnings in order to reduce their hours of work." (pp. 85). Bockstael et al. (1987) make a similar observation noting that in their sample, "individuals with fixed working hours appear to value time much more highly than the wage rate and would be willing to trade work for leisure" (pp. 301). Hahnel (1998) concluded that results from a 1994 survey suggest that U.S. workers have a slight preference for pay cuts in order to reduce their work hours. About 50% of the respondents claimed they would accept some reduction in salary in order to work a four day week.