In this post, I would be discussing interesting and not so mainstream ideas. One of the most relevant topics of all time is the gender pay gap – even a recent study mentions that women earn 34% less than men. To understand more about gender (specifically women in this context) I think it is relevant to set the context with economics and understand the evolution of economic framework.
In the past, women had to fight for their political rights – 21st century women are fighting for their economic rights in the form of equal pay, paid maternity leave etc. The struggle is going to be definitely hectic but changes in economic model and framework would help in adapting to social changes in our society. A traditional macroeconomic framework was very much men-centric to begin with. The conventional division of labour was labelled based on gender which started changing after two world wars. In Marxian terms, women were considered to be the reserve army of labourers when men were busy fighting for the country. But there is more to this, an orthodox form of economic system coexisted to counter the liberal economic model to be more inclusive. Just like any other discipline, economics also evolved in the last few decades, but the close connection with social science resulted in a complex approach in the field.
The recent efforts have been commendable in the field of economics to bring gender and development however, the social settings keep changing and having a fixed framework of analysis might be of no help.
Gender Wage Gap – Unsolved Mystery
Why is the wage gap a highly debated and discussed issue in the field of economics? Simple, it intersects the social idea of equality with the economic idea of labour theory. It means so much to reduce the gender wage gap because in a way it could be synonymous to getting equal rights to vote. One way to know if the discipline has achieved equality is to look at the gender wage gap. India has not made a significant improvement in providing equal remuneration for men and women. The disparity has not changed much since the last 20 years – which is quite shocking given the literacy rate among women is getting better.
Is this a simple discrimination in an organized market or is there a logic behind such wage setting?
According to Article 16 of the Indian Constitution, every citizen has the right to equality in opportunity and Article 39 promises equal pay for both men and women. For example a worker engaged with a public works program irrespective of their gender they are entitled to get paid equally. Historical micro versions of division of labour were designed by men and accepted by women to undertake domestic work while men become resourceful in bringing the finance. The natural subjugation was internalized and eventually reflected in a series of social tension in the form of a much needed feminst revolution. Acknowledging this as an organic process has been the biggest challenge to technocrats and activists as well.
Include housework of women to GDP?
An elementary debate drawing the absence of women’s domestic work in the GDP is a classic argument for the bias in the classic economic models. Although none of the textbooks really explicate the direct bias against women, it was rather intuitive because models were mostly for economic growth. During the time of industrialization – when the work involved substantial physical labour, women’s physical disadvantage kept them out of the workforce. The primary goals of economics models were neither to recognize women’s contribution nor was to ensure equitable development. Referring back to a previously written article on overpopulation, the growth rarely followed development or welfare during the industrialization period. Women across the hierarchy had a pivotal role to play in the household yet were never included in the output or given any value. In economics, you artificially create inequality by not valuing a particular group or segment. Undoubtedly, this is an outcome of the social setup that favoured men.
We have come a long way in acknowledging the structural inequality. The effectiveness in handling a tangible approach has bigger targets to be achieved. Gender pay gap, unemployment, etc are few of them however there could be multiple dimensions in a different set of hierarchy that is probably not even identified.
Making a move from just economic growth to development is a well appreciable effort. A business operates and must operate in tandem to the social requirements of the market. The onus of not just making profits but also taking care of the people becomes inevitable for any business.
Recently the government of India has recommended a way to include women’s work as a part of our GDP. It is a rather narrow and outdated approach in resolving gender problems by masking with a tedious complex inclusion of housewives work in our GDP. Assigning a value for housewives when most women are aspiring to land up in a job will rather create a misleading picture. Although I am not against the process of including housewives’ value, economics as a tool to solve social problems in 2020 must move beyond just a GDP calculation. Markets need to be factored in the process of achieving gender equality.
This is where I believe a marriage between social science and economics is extremely important. In a free market set, the business sector prioritizes their customers and their values. When the majority of customers uphold their vision of gender equality, business would arbitrarily change their method to a more gender inclusive business. However, the state’s law and order must be transparent to ensure that corporates practice a more gender inclusive model. An alternate perspective (I welcome comments on this idea) is to acknowledge the productivity difference between men and women but incorporate the ‘opportunity cost’ for doing domestic work, maternity duration (other social costs borne by a woman for landing a job) and paying an equal remuneration would be a more progressive framework in a market that prioritizes development over growth.
A sophisticated methodology has to be developed in the economic discipline to be integrated with social and political changes. Activists critiquing business is no good either, we are running a risk of developing less if we pit economics against social science. They need to be treated as siblings and come out with moral and practical solutions.