Illuminating the role of gender in the economy

This chapter discusses the role of gender in economic relations, processes, and outcomes. Gender differences in economic outcomes such as labor force participation and wages have received growing attention from economists in the last several decades – a positive and much needed development in economic thinking. Indeed most readers will know that on average, men are paid more than women for the same work. While such information is important for our understanding of the economy and people’s economic lives, the role of gender in economics goes beyond such descriptive differences in outcomes. We can go further and employ ideas and experiences related to gender to shed light on many underlying mechanisms in both the economy and in economics as a science.

As Paul A. Samuelson and William D. Nordhaus (2010: 4)^[1] say, economics is often thought of as “the study of how societies use scarce resources to produce valuable goods and services and distribute them among different individuals.” This definition of economics covers quite a lot of ground: it says that economics strives to understand how and why different people and groups came to be in the economic situation they are in. The definition further implies – since economics seeks to understand the processes or the “how” behind the allocation of resources – that it could help change undesirable distributions. However, as evidenced by Samuelson and Nordhaus’ own book, the discipline sometimes falls short of working to achieve the first goal of understanding economic processes, while the latter possibility to enable change is explicitly left out of the discipline. One major example of economics’ ignorance of the production and distribution of valuable goods and services is its widespread disregard of the role of gender in the economy, which, as this chapter will outline, is a major failing of the discipline. Feminist economics is the branch of economics most engaged with filling this void.  Feminist economics is a sub-­‐field of economics that gained significant traction and recognition in the 1990s and 2000s, although there had been work done as early as the first half of the 20^th century that could today be considered feminist economics. Although it would be convenient to have a clear definition here, it is difficult to define feminist economics in just one way. Instead, this chapter discusses some of the main issues in feminist economics, highlighting how they contribute to a more holistic understanding of economic processes and outcomes than what the mainstream economic models offered by Samuelson and Nordhaus can give us. 

An important starting point in much feminist thought, including that in feminist economics, is an understanding of the idea of “gender.” Here we make a distinction between the categories of biological “sex” and social “gender.” The former term refers to biological differences between people generally related to reproduction, such as hormones, genitalia, and internal reproductive anatomy. Thus, we have categories of “men” and “women”, distinguished by biological difference.

“Gender”, on the other hand, refers to the social assignment of traits and competencies to people based on their biological sex. (Biological sex may also be seen as a social construct, but that is a topic beyond the scope of this chapter.)

People with female biological characteristics, for example, are expected to behave in a “feminine” manner – the definition of which varies across cultures and over time – based primarily on their possession of some of these characteristics. Thus, in contemporary western societies, women are supposed to be the primary caretaker of their children, while men are (still, often) supposed to provide financial resources for their families. At least to some extent, these social expectations can help us explain why women continue to do the majority of the care-­‐ and housework, even when they do as much paid work as their male partners. 

The relevance of gender as a social category in economic processes is not exclusive to economists who consider their work to be feminist; following Akerlof and Kranton (2000)^[2], many economists recognize that identity can play an important role in economic decision-­‐making. Akerlof and Kranton put the concept of identity into a utility function and analyze it in a game-­‐theoretical framework, bringing it more attention and acceptance in the economics profession than feminist economists had ever received, although they had been saying much of the same thing about the role of gender in determining work profiles and other economic circumstances for years before the publication of Akerlof and Kranton’s model. We return to the issue of which academic work is recognized as “valuable” economics again below. Understanding gender as a socially constructed and assigned category helps explain how economic decisions and circumstances are influenced by the expectations assigned to us. As in the example of care work, the fact that men and women often do different types of paid work can be better understood via a lens of gender roles. That most engineers are men while most kindergarten teachers are women must not be completely explained by an analysis of markets distributing work for the price of a wage. We can instead understand these differences, at least in part, by the social assignment of gender-­‐appropriate traits, interests, and competencies for men and women. 

Another early issue in feminist economics was a critique of the simple exclusion of women in economic analysis. Not only were very few economists females, but until about the 1960s, the economic experiences of women were largely left out of economic analysis. Women were not the agents studied in economic models. In part, this ignorance of women’s economic lives was due to the fact that “women’s work” – at that time (and to some extent, still today) considered household and care work – was not considered economically interesting or important. Even when the household – women’s “sphere” – began to be taken into consideration with the rise of New Home Economics (NHE) in the 1960s, the social and economic realities of many women continued to be ignored, this time by an academic framework which assumed and supported structures which justified and perpetuated women’s weaker position in the economy. In particular, a main issue in the New Home Economics models was that a sexual division of labor in the household, in which a man was the income earner while the woman did the unpaid housework and caring labor (these were always heterosexual couples), was the most efficient and therefore best arrangement, based on women’s alleged comparative advantage in the unpaid work. This framework, while it was one of the first to bring women’s existence as economic agents into the field, offers only a limited understanding of the significance of gender in economic processes and outcomes. In particular, it ignores the fact that efficiency in production is actually not the goal of many households; couples and families often make decisions about work based on factors other than maximizing productivity, such as enjoyment and fairness. Further, the NHE framework perpetuates and justifies an image of family life that may not be ideal for all individuals, couples, and families. This justification is in turn often used in the creation and implementation of public policies (such as laws granting longer maternity leave than paternity leave), which then reinforce the sexual division of labor. 

A telling example of the ignorance of women and gender in the discipline of economics is the fact that in their 650+ page long book, Samuelson and Nordhaus discuss gender in just three short sections: in the context of explaining discrimination, in talking about poverty, and to discuss labor force participation. The authors say that the book is read by millions of people who want to understand how the economy works – but talking about the specific economic situation of half of the world’s population in just a few paragraphs of a 650-­‐page long book does not do much justice to fostering an understanding of the whole economy.  In their first of three mentions of gender, talking about discrimination, the authors say that discrimination against women has declined significantly, and that leaving aside the “family gap” (the gap in earnings related to labor market interruptions that occur when people – mostly women – leave their paid jobs to care for children, the elderly, and the sick), “women appear to have approximately the same earnings as equally qualified men” (p. 263). Even if this were statistically the case, framing the discussion in this way ignores the fact that gender-­‐based discrimination continues to exist (even while Samuelson and Nordhaus say that “gender discrimination… is vanishing today” (p. 328)). Thus even achieving the same qualifications as men, such as studying in the same field and having the same amount and extent of labor market experience, probably meant that women faced discrimination along the way to achieving their qualifications. 

In the second example, Samuelson and Nordhaus explain high rates of female poverty as a result of divergent incomes between highly educated/skilled workers from those with less education and skill. The assertion seems to be that women, who are more likely to be in poverty, are in this position because of their lower education and skill. However, women’s completion rates of higher education passed those of men in almost all developed countries in the last several decades. There must, then, be another explanation for women’s higher poverty rates – but Samuelson and Nordhaus do not look for one. Finally, in their discussion of women’s rising labor force participation rates in the last half-­‐century, the authors say that “a change of this magnitude cannot be explained by economic factors alone… one must look outside economics to changing social attitudes toward the role of women as mothers, homemakers, and workers” (p. 252). Samuelson and Nordhaus leave the discussion there, though, and do not say any more about the topic. In this case, we see a clear example of economics being unable and/or unwilling to investigate the “how” in “the study of how societies use scarce resources to produce valuable goods and services and distribute them among different individuals.” Instead, when the models in economics fall short of being able to explain something such as labor force participation, the implication is not that the models ought to be changed, but instead that the topic is simply not economics. It is curious at best that a foundational textbook in the discipline says that understanding how and why the labor force participation has changed is not part of economics – if labor force participation is not part of economics, what should be? 

The difference between simply observing differences by gender instead of looking for the mechanisms behind the existence of the differences, as Samuelson and Nordhaus seem to prefer to do, is a central distinction between feminist economics and what one might call “gender economics.” The latter brings gender into economics by analyzing differences that may exist between men and women, such as gaps in pay, in wealth, or in labor force participation. While feminist economics certainly applauds the recognition of gender-­‐specific differences in the economy, an important goal of feminist economics is to be able to take the analysis further. Unlike Samuelson and Nordhaus, who say that understanding gender gaps would require “look[ing] outside economics,” feminist economists would prefer to see the discipline be expanded to include explanations of why gender-­‐based gaps in economic outcomes exist. Feminist economists thus consider insights from many other fields in their analysis of how and why we see economic differences by gender. For example, they may draw on insights from psychology, sociology, history, demography, and political science to explain the fact that more women now participate in the paid labor force than ever before, such as the relevance of the birth control pill, the feminist movement, and changes in public policy. Often times, feminist economists also use an analysis of power relations to help understand economic phenomena. In this case, part of why more women in developed counties are now working for pay is that their husbands and/or fathers may not legally stop them from doing so. Feminist economics calls for a more interdisciplinary approach to observing and analyzing economic phenomena – one that, upon reading Samuelson and Nordhaus’ book, one would not think is very welcome in the mainstream of the discipline, but which can help us explain economic processes.  

Ignoring insights from other disciplines leads to the fact that economists hardly can or do adapt their models to more closely reflect reality. Similarly, feminist economics are critical of the assumptions made about economic actors or agents, who can seamlessly identify and maximize their utility, but who must have been born with their preferences, because we never hear anything about personal development in economics, as much as it is a part of the human experience and one that affects a person’s economic circumstances. Another point of criticism from feminist economists is the almost exclusive acceptance of mathematical formulations and econometrics as appropriate methodologies for answering questions in economics – as highlighted in the example of the “Economics and Identity” discussed above. As Nelson (1995:138) says, “quality in method is identified primarily with mathematical rigor.”^[3] 

The critiques of the exclusivity of methodology, type of agent, and domain of economics are not exclusive to feminist economics. Most heterodox branches of economics have similar qualms with the mainstream of the discipline. A specific contribution of feminist economics regarding these issues, though, is the claim that these topics can also be understood in gendered terms. As Nelson (1995:133) points out, the characteristics of the models, methods, and agents in economics can be described as possessing or striving for “objectivity, separation, logical consistency, individual accomplishment, mathematics, abstraction, and lack of emotion” – attributes typically associated with masculinity. To be sure: this association does not refer to men, but instead to the social construction of the ideal masculinity. These are also not prescriptions of gender made up or supported by feminists or feminist economists, but instead those which exist in social relations. Qualities often associated with femininity, such as subjectivity, emotionality, and interpersonal connectedness, are welcome and wanted in some other social sciences, but economics decidedly rejects such characteristics for its own models, understanding of its agents, and its methods. Thus, while the general critique that economics is too narrow in what it considers to be good science is shared by several heterodox or pluralist schools of thought, feminist economists also offer a gender-­‐specific point of view on the valuation of the approaches used by economists to try to understand the world. It is helpful to understand the discipline in these gendered terms when we recognize that phenomena with “masculine” characteristics are given more credit or acceptance than “feminine” ones. Assertiveness, risk-­‐taking, and leadership – masculine characteristics – are often rewarded on the labor market, while feminine characteristics such as empathy or care are not as highly valued (read: paid). Social expectation and rules dictate that masculine things are more valuable and this gender bias in value judgement may influence how economists decide what and how to study the economy. Being exclusive in methods, agents, and domain of study is dangerous, though, because it leads to a narrow-­‐minded understanding of the economy, setting us up to miss some of what is going on.

Finally, an important element of feminist economics, which is purposely left out of the type of mainstream economics laid out by Samuelson and Nordhaus, is equality. It is not surprising that feminist economists are concerned with equality; the cornerstone of feminist thinking is that all people ought to have equal political, economic, and social rights. In their pursuit of “objectivity,” economists such as Samuelson and Nordhaus decide to not take a normative stand on issues regarding fairness and equality. Instead, they say that these are “political questions that are answered at the ballot box in our democratic societies” (p. 39). Feminist economics criticizes this stand, saying that the structure of the economy may influence political decisions, and that the mainstream economics laid out by Samuelson and Nordhaus is thus not as neutral as it claims to be or appears to want to be. 

Many of the insights of feminist economics can help us understand economic processes. It shows that, unfortunately, the current mainstream of economics cannot adequately explain many economic phenomena. Instead of simply criticizing it and walking away, the goal of feminist economics is to enable the discipline to be able to say even more about how valuable resources are produced and distributed. An analysis of gender in the economy shows that feminist economics can help economics to develop into a field more able to fulfill its stated goals.  

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