Women in economic activities

| Updated: October 24, 2017 04:27:18

Women in economic activities

According to Becker's household labour allocation model, each household member spends his/her total time in three ways: leisure, productive activity at home (non-market work producing utility) and productive activity outside (market work). Given a fixed time allowed for sleep and personal care, an individual allocates time between home production of goods and services and market work to acquire market goods. The labour supply decisions are assumed to be affected by productivity in market work reflected in market wage rates given tastes and preferences for market goods versus home-produced goods, technology in production of home goods, price and availability of market goods, and income consisting of both labour and non-labour income.
Gender division of labour can occur when men and women have different comparative advantages. For example, men may be relatively more productive in market work and women in non-market work. Such differences may arise due to discrimination of women in the labour market. In such a case, efficient allocation of labour occurs for the household if women and men specialise according to their comparative advantages. The model implies that increased competition and reduced labour market discrimination can promote women's participation in market activities. Economic and technological changes can lead to changes in labour allocation. For example, market wage rate may go up due to increased productivity of labour. On the other hand, improved infrastructure in household production (water supply, better stove, etc) may reduce the time needed for homework. Both can induce more market work. Becker's model has provided powerful explanation behind changes in labour force participation of women in many countries especially, the industrialised ones.
The application of Becker's model is, however, problematic in traditional societies of Asia, such as Bangladesh where socio-economic factors affect tastes and preferences with respect to women's work and valuation of market versus non-market work. Culture and social values determine tastes and preferences not only at a given point of time, but also has dynamic consequences. Social norms about the roles of men and women can create productivity differences in market versus non-market work over time through feedback effects on human capital. Another complication arises because labour allocation decisions are related to different types of work: market work for wages and subsistence production activities within the household where production generates income or saves income. These are defined as economic activities, and some activities which generate utility but not cash income are defined as domestic activities. Although the distinction between the latter two types is not very clear-cut as domestic activities do have a market value, (for example, the price of a nurse, teacher, or prepared food), it has some important implications in rural Bangladesh. Labour allocation between income-generating activities at home and domestic activities is affected by economic as well as socio-cultural factors, and this deserves more attention because women's participation in outside economic activities is very low in Bangladesh.
Higher wage rates and increased opportunities of income from household economic activities can have income and substitution effects. Substitution effects will lead to increased participation in economic activities at the cost of reduced time for leisure and/or domestic activities. But income effects may work in the opposite direction especially if socio-cultural factors work against women's participation in economic activities. For example, in rural Bangladesh, women from well-to-do families do not engage themselves in market work, and they devote more time in childcare and domestic activities instead of economic activities. On the other hand, participation in market activities increases with education and economic status. In fact, Bangladesh exhibits a similar tendency of U-shaped labour force participation function as found in cross-country analysis. Variables related to socio-economic status of the household are included in the model such as size of landholding, education, modern technology and non-agricultural income with expected impact explained above.
Low level of participation of women in labour market activities and their segregation to home work may be due to discrimination in the labour market. From policy point of view, it is important to know how discrimination is defined and measured, and why it occurs. Labour market discrimination occurs when two workers with similar characteristics are paid differently for the same job. Men and women may have different income due to differences in personal characteristics like age, education, work experience and job characteristics. It is often difficult to prove discrimination against women because they do different jobs. However, segregation of women to low-paid occupations in spite of their similar characteristics like men is itself a sign of discrimination.
Labour market discrimination reflected in earnings and occupational gap between men and women has been explained in terms of neo-classical and institutional approaches. According to Becker's theory of discrimination, women may face discrimination in entering certain occupations and/or accept lower wages because employers, co-workers and customers may have a taste for discrimination (that is, they prefer male workers instead of female workers). Human capital approach or statistical discrimination focuses on productivity differences among male and female workers. Women, on average, are considered to be less productive, less attached to the labour market and therefore, earn less, and are segregated to low-paid occupations. The institutional approaches concentrate on the role of culture and social norms in shaping tastes and preferences of employers with feedback effects on the supply side. It is argued that given the discrimination in the labour market, women tend to invest less in education and career job, to specialise more in homework and less demanding market work. 
The writer, a former Professor of Economics at Jahangirnagar University, is Chair, Department of Economics and Social Sciences (ESS), BRAC University. 
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