Tuesday, April 24, 2012

The Economics of Household Labor and Pay Differences between Sexes

The Economist recently published a summary of recent study on division of household labor which reinforces a lot of what we already know.  The previous studies that it references are worth mentioning, and some of the other conclusions that it draws are probably new. Even in a developed country like America, women spend three times the time doing housework on an average day as men. The traditional economic explanation of this has been that since an average American woman earns 20% less than a man, the family earnings would be maximized if the lesser paid partner did the unpaid work at home.  There is some evidence to support this hypothesis. Women who earn more do less work at home. The recent study, however, has found alternate explanations for division of labor. It suggests that how much housework an average man does is proportional to how much he likes to do it.  For a man the time he spends on housework is not correlated to how his income compares to the average. For a woman unfortunately, her preferences play no role in the time she spends on household work.

On the question of the pay gap, you always wonder whether it is the cause or the effect. Do women do more housework because they earn less or do they earn less because spend more time and effort in managing the house (and consequently less time on activities that build value). That an equally educated woman earns less over her lifetime than a man is a reality true even for those with the best qualifications, and part of the explanation is logical. A women takes more breaks from her career, whether to support her spouse or to raise children. In fact, way back in 2005, I came across a study of female graduates of Harvard which found that as many as 40% of them took time off at some point in their lives. The post is here.

In 2009, New York Times reported a study done by Payscale. It found that adjusted for the type of jobs taken up by a female, industry, type of company and other factors, at least for jobs earnings less than $100,000 an year, the 20% pay gap between men and women disappeared. So the difference can be explained by career choices than discrimination, except at higher salaries.

This has always been an area of interest and the relevant sources are documented below. I have always believed that - if you control for other factors - how gender roles were played and household labor was split between parents is significant determinant of how much responsibility a man takes at home. One day, hopefully, I will find a study that explores that.

1) 2012: The economist article, “The ironing lady”, is here.
2) 2012: The Research Paper, “The Role of Preferences and Opportunity Costs in Determining the Time Allocated to Housework”, is here.
3) 2009: The New York Times article, “Women Earn Less than Men, Especially at the Top,” is here.
4) 2004: My own post, “Work, Family, Personal Life: Why Not All Three,” about the conference and study at HBS is here.

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