Question

The following statement is based on empirical evidence that has been true historically (but will not necessarily always be true!). Please explain why the following statement has been true: In a heterosexual married couple, if the husband receives a raise, it prompts an increase in leisure for the wife. However, if the wife receives a raise, it tends to increase her time in the market place. On a graph, explain the difference between the production substitution effect and the consumption substitution effect of a wage change.

Answer 1

Myriad strategic decisions by parents to socialize their daughters for the marriage market rather than for the labor market in light of an economic system for which marketable female labor is not as productive as male’s. Most of these decisions were undoubtedly not strategic at all, at least in the sense of conscious efforts to maximize utility. Rules of thumb that work for one generation get passed along to subsequent ones, and as long as they work, tend to become enshrined in moral and religious teachings. Put economistically, social norms about gender roles enabled people to economize on information about choices over education, marriage, and work, and to help them avoid making potentially costly errors.

The resulting enormous differences in the allocation of social resources across the sexes were out of all proportion to the small average difference in physical size between the sexes. There were surely many egregious cases of inefficient use of resources, where strong women stayed at home while weak men struggled with ox and plow. But social norms are most powerful when they are generalized as rules, and so the trade-off was made. There were also many efficiency-improving variations on the theme, such as where a weaker division of labor emerged under conditions of land abundance. The brawn advantage weakens with land abundance because the labor inputs are a smaller piece of the equation and raises the marginal product of labor. But on balance, we suggest, the gendered division of labor became ubiquitous because it was efficient, creating gains from trade within families when technology was not an available substitute for brawn.

The power of norms to outlive the economic circumstances from which they sprang is most visible when the arrival of technology is met, as in the case of Victorian England, with a retrenchment of gender roles. Analogously to the staged celebration of political absolutism after the French Revolution, those threatened by a blurring of traditional gender roles sought to draw the lines between the sexes even more firmly. Moral and religious education added to the tensile strength of social norms by attaching cosmic significance to what otherwise might have been simple economic choices. Although efficiency is a tough competitor to beat in the very long run, moralizers and other incumbents have been able to manipulate social norms for an effective eternity for any given generation of women.

Changes in the relative productivity of male and female labor under different modes of economic production explain the broad arc of gender socialization by way of changes in the bargaining power of women inside the home. Demand for female labor confers on females the ability to leave unsatisfactory marriages, which in turn translates into women’s bargaining leverage within the household. The rise of the service economy has set in motion an avalanche of changes as more women enter the labor market, divorce rates increase, and girls are taught independence over subservience. We have optimistically proposed that these changes mark a shift towards a more gender-egalitarian equilibrium, but we have also suggested that they are accompanied by a growing gender gap in political preferences as well as unsustainable low fertility rates. In addition, subtle differences in labor market conditions across modern democracies explain another striking pattern. In economies dominated by long term labor contracts, the expected productivity of female labor is discounted by the probability that females will leave the job before the employer has reaped the full value of its investment in their human capital. As a result, female labor force participation is lower in these countries, except where large public sectors—as in Scandinavia—account for a large portion of female employment. There are in fact multiple gender equilibria corresponding to distinct varieties of capitalism.

Female bargaining power, measured in our empirical investigation by the proportion of household work they do over and above what is predicted by labor market participation alone, is stronger in countries with fluid labor markets, and where public sector employment is large enough to offset the negative effects of long term contracts on female employment in the private sector. Where barriers to divorce cut off a possible marital exit, demand for female labor has a muted effect on female bargaining power.

In rich democracies, the same factors that confer household bargaining power on women also have a positive effect on fertility. We interpret this to mean that women would like to “have it all” as long as having children does not block their possibilities of accumulating human capital in the labor market. Trying to boost fertility with a campaign of pro-family rhetoric and incentives is likely to have precisely the opposite effect as intended. This is an important lesson to democracies in especially southern Europe and East Asia where traditionalist views on women and the family are increasingly in conflict with the desire of, and opportunities for, women to have independent careers. We surmise that this tension will eventually translate into a significant gender gap in voting and a shift in government policies. Indeed, this may already be playing itself out in a country like Spain where the Zapatero government has taken on the Catholic Church over issues of family policy and where women voted disproportionately for the incumbent socialist party.

But female bargaining power in the family does not always have the effect, as one might expect, of also boosting female political representation. While it is true that higher levels of female labor market participation creates a gender voting gap between male and female voters that parties may try to exploit by fielding female candidates, the nature of the political labor market itself blocks such a simple connection between potential demand and supply of female candidates. As with labor markets in the economy, political labor markets characterized by long term contracts—or a premium on seniority--disadvantage female candidates. In electoral rules where personal political clout is an important asset, relatively few females can match males’ unfettered ability to accumulate political capital early and continuously through their careers. In proportional representation systems, where party loyalty supplants individual visibility in importance, women are able to compete on more equal footing and do far better in electoral races.

Product A units) 12 Product B (units) 0 02 a6 04 Substitution Income effect effect Overall increase in the quantity demanded Substitution Effect and Income Effect: The change of relative prices is the substitution effect (steep line to dotted line) and the change of purchasing power is the income effect (dotted line to parallel solid line)