An Irish woman's social, political and domestic commentary
Thursday, March 04, 2004  

Housework and the economy

The economists are ganging up on me. Kevin writes
"My response is that your attitude to David should be, to borrow from a certain high profile movie -- "Forgive him, for he knows not what he does" -- being an economist. Because the truth is, I essentially agree with him. Even we economists recognise that unpaid housework ("home production") is one of the biggest omissions from the GDP numbers. If you pay a nanny to do it, it's in GDP, if the housewife does it, it's not. Clearly an anomaly.

And indeed the budget calculations for having a nanny are brutal -- the couple is trying to pay a nanny a pre-tax salary out of their post-tax income, so the tax wedge is getting them both ways even before you factor in the other guilt expenses that you talk about it. But it's also a fact that the economic statistics don't lie -- a big reason why women earn less than men in any given job is that they have less employment experience, one source of which can be the decision to stay at home. The longer-term issue is perhaps even more serious -- the kids don't need the intensive care for ever. That's a lot of hours in the day that could be spent doing something else, which has the makings of a mid-life crisis if not fulfilled.
Ireland is unusual because it had its demographic transition so much later than other countries -- basically our cohort was the last of the large families. Once the 2.2 kid family becomes the norm, that's a lot more potential hours in the labour market for the housewives. And cheap furrin nannies are the way to exercise that time. With open immigration for nannies, the price should stay relatively low, but the skills acquired by women in the labour market will cause their salaries to rise, so over time it becomes a better proposition than it might seem at the start.

And things may not be so bad for those nannies themselves -- remember that an increasingly accepted explanation for "how the Irish became white" in America is that the 19th century immigrant women saw how the other half lived by looking after their kids, earned a steady income and saw the tricks of being a respectable household. A couple of generations later, it's the descendants of those Irish nannies in Boston looking for nannies.

Now there's a fundamental sense in which you are right. Countries have to choose where they want to be on the employment -- leisure tradeoff. If we make a decision that we want women in the labour force, as per the
Lisbon target (which really is an incredibly stupid thing to target), that's equivalent to a decision that as a society we are going to have less downtime for the parents and kids. And the costs of that should be recognised, with the US as the leading example -- Happy Meals, stretched school budgets (as the school becomes the de facto day care), and the
more difficult to quantify things like how well socialised the kids really are.

A society that decided to put an economic value on being a housewife could indeed be a happier one -- but it would also have higher taxes to meet the payments to these housewives. And the smaller the working population, the more difficult it is for the society to provide for everyone's retirement.
What's the solution to the latter problem? -- bring in more immigrants to generate a larger (tax-paying) labour force. So in fact the economic logic is that the immigrants are coming, it's only a question of when -- to wipe baby noses now, or to work in our factories (and wipe retirement home noses) 40 years from now. I think the economist view would be the former choice, while perhaps a tad cynical, is the right one."

posted by Sarah | 21:48 0 comments
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