Economic Viewpoint
HOUSEWORK: THE MISSING PIECE OF THE ECONOMIC PIE
BY GARY S. BECKER

10/16/1995
Business Week
30
(Copyright 1995 McGraw-Hill, Inc.)

Household production is an important part of the output of all nations, yet housework is not recognized when measuring the goods and services that make up the gross domestic product. This undervalues the contributions of women, since they are responsible for most of household production.

Families and other households are in effect small factories that even in the most advanced nations produce many valuable services and goods. They rear children, prepare meals, and provide shelter. They take care of sick members, give nursing and other assistance to the elderly, and perform many other helpful tasks.

Women contribute about 70% of the total time spent at these activities--even in egalitarian nations such as Sweden. They do virtually all the housework in poorer nations such as India. Some feminists argue persuasively that including housework in the GDP would raise the ``consciousness'' of women, especially in the less-developed world where women are badly treated. This would help to improve their bargaining position in marriage, since many housewives would ``earn'' more than their husbands if a woman's household contribution had a monetary value. Yet other feminists do not want explicit calculations of production for housewives, because that would conflict with their agenda of getting women out of the household and into the labor force. LONG HOURS. It is time to recognize housework as part of the goods and services in a nation's GDP. The long hours spent at housework suggest that production in the home is a sizable percentage of the total output of all nations. After all, when a family hires someone to care for the children, clean the house, and cook, that work is counted in the GDP figures. When a parent does it, it is not.

There are several ways to quantify and measure household production. Although GDP only includes the production of goods and services that are bought and sold, they do include a value for owner-occupied housing by using the cost of rental housing that has comparable space and amenities to owned housing. The value of housework can be measured by what it would cost to buy services in the marketplace (such as baby-sitting) to replace those provided by parents.

These methods are used by Robert Eisner of Northwestern University in his careful study The Total Incomes System of Accounts. Eisner finds that the imputed value of household production in the U.S. exceeded more than 20% of gross national product from the mid-1940s to the early 1980s--the last year of his estimates. Much cruder calculations by the U.N. in its latest Human Development Report indicate that household production is worth more than 40% of world output. SWEDISH SUBSIDIES. Neglect of household production in calculating the GDP distorts measures of economic growth. The huge increase in labor-force participation of married women during the past several decades came mainly at the expense of a reduction in the time women spent at unpaid household production. The rapid increase in GDP during these decades neglects the sizable decline in time spent on housework.

The substitution of market production for household production is clearly the reason for the rapid expansion of the child-care industry since the late 1970s. Working women reduced the time they spent caring for their own children by hiring other women to do it for them. Women cared for one another's children.

My colleague at the University of Chicago, Sherwin Rosen, studied a situation in Sweden, where the child-care industry is unusually extensive, partly because it is subsidized by the government. He does not take a stand on whether children are harmed when their mothers work. However, he does show that these subsidies caused considerable inefficiencies by artificially inducing many women to enter the labor force. For example, subsidies lowered the price to women of child-care services below its true cost. I found his conclusions persuasive, but they have been highly controversial in Sweden because many groups there want to ``nationalize'' the family by making government responsible for child care. They want to encourage mothers to enter the labor force so that they must hire other women to care for their children.

Including housework in measures of GDP would raise the self-respect of women and men who stay at home to care for children and do other housework. It would also provide a more accurate picture of GDP and growth and might lead to a different interpretation of public policies that affect the allocation of time between household work and market work.