Ideas and Models
my CENTRAL IDEA: think in terms OF <<Work-In-HOusehold (WIHO)>>
DEFINITION: Work-In-HOusehold (WIHO) is defined as a service supplied by one household member for the benefit of another. WIHO is similar to work for firms.
Supplying a service always involves time and therefore an opportunity cost on the part of the worker.
Both worker and beneficiary have to be old enough to establish an implicit or explicit contract about that work.
The supply of WIHO is upward-sloping: the better the beneficiary treats the worker, the better the worker is likely to treat the household member benefiting from the work.
The more valuable the product of WIHO to the (potential) beneficiary, the higher the demand.
APPLICATION TO COUPLES:
In case one partner does more of the WIHO the other may need to compensate the WIHO-worker for the relationship to last.
‘Marriage’ markets are defined as markets for WIHO where demand is by actual or potential beneficiaries of WIHO and supply by actual or potential spouses or partners. Demand and/or supply are expected to shift as a function of the characteristics of both worker and spouse/partner. There are multiple marriage markets for various types of WIHO workers differentiated by education, ethnicity, sexual orientation, age, etc.
APPLICATION TO EXTENDED FAMILIES: Example 1: grown child cares for elderly parent; Example 2: grandparent does WIHO benefiting grown child and grandchild.
More in my book The Marriage Motive, https://econoflove.sdsu.edu/documents/marriage_motive/index.html… Chapter 2.
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THE WIHO MODEL: FIRST NON-COOPERATIVE MODEL OF INDIVIDUAL DECISION-MAKING WITHIN HOUSEHOLDS
As in standard labor market models, the WIHO model is a non-cooperative model involving cooperation between individual workers and individual employers via the price mechanism (I assume that prices for WIHO are established). According to this model, in households individuals make their own decisions on how to allocate their time and other resources. Allocation of time decisions determine LABOR SUPPLY and TIME SPENT IN HOUSEHOLD PRODUCTION (including WIHO). INDIVIDUAL CONSUMPTION also follows. Modeling joint consumption is more complex.
GENDER AND WIHO: In households women often do most of the household production work and if they are in heterosexual couples, men tend to be the WIHO beneficiaries, even if they also engage in household production. It is therefore often observed that men make net intra-household transfers to women as part of implicit contracts regulating WIHO in couples.
More in my book The Marriage Motive, https://econoflove.sdsu.edu/documents/marriage_motive/index.html… Chapters 3-5, which are based on my article in Economic Journal https://researchgate.net/publication/4891984_A_Theory_of_Allocation_of_Time_in_Markets_for_Labor_and_Marriage…
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One major implication of the model is that value of time of home producers is determined in markets for those willing to do this type of work. If one accepts that, it implies e.g. (a) rejection of most economic theories about the determinants of the value of time of those who don’t participate in the labor force, even if their author won a Nobel prize; (b) sex ratios in marriage markets influence the value of time, who consumes in the household, and who works in the labor force; (c) labor supply varies with inter-ethnic marriage and spousal age differences, see my JPE article; and (d) decision=making in marriage is a function of sex ratios, relative empowerment of women and many other factors (see Chapter 4 in On the Economics of Marriage. There are many more implications, some of which are discussed in my two solo-authored books.
I have tested some of these theoretical predictions, including the one stating that sex ratios will be inversely related to women’s labor force participation. I was the first to test that across cities (Grossbard and Neideffer 1996) and using birth-cohort variation (Heer and Grossbard-Shechtman 1981, Grossbard-Shechtman and Clive Granger 1998, and Grossbard and Amuedo-Dorantes 2007)
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COMPARING MY WIHO MODEL of DECISION-MAKING IN HOUSEHOLDS with GARY BECKER’S (Becker was my principal professor; (Other teachers who influenced my models include Jacob Mincer, H. Gregg-Lewis, and James J. Heckman)
What is common to the WIHO model and some of Becker’s models? My model was influenced by Becker’s (1973, 1981) competitive marriage market model, the model he emphasized in his graduate classes on economics of the family at Chicago in the mid seventies. Our models both contain cooperative and non-cooperative elements: the assumption of individuals competing with each other (non-cooperative and cooperative elements, such as the assumption that a price mechanism helps cooperation and coordination. In that sense all competitive market models—whether they are markets for bread or for soulmates—include a mix of cooperative and non-cooperative elements. It is just a bit harder to observe prices in competitive marriage markets than in competitive bread markets. For more on this theme see my book The Marriage Motive (Grossbard 2015). References: Becker, Gary S. 1973. "A theory of marriage: Part I." J. of Political Economy, 81:813-846; _____. 1981. A treatise on the family. Cambridge: Harvard University Press; Grossbard, Shoshana. 2010.
(Posted May 14, 2020) As is the case with my WIHO model, Becker’s models have both non-cooperative and cooperative elements. Becker called his book on economics of the family “A Treatise” (Becker 1981), implying a unified and integrated theory. There are some themes running throughout the book, such as cooperation and altruism. It is often assumed that all of Becker’s models of the family are cooperative. For example, Amy Farmer and Jill Tiefenthaler (1997) write: “Led by the pioneering work of Gary Becker...economists have been studying the family for thirty years…[and they] focus on families that exhibit cooperation and altruism.” However, one of the central models in
(posted april 23, 2020) We both consider intra-family exchanges of love and care for money. According to Richard Posner: "Becker's critics thought that marriage, for example, was about romance, not about maximizing your utility," "Gary would write about division of responsibilities, where the husband is bringing in the money and the money is being used to finance the wife's work, to take care of the kids and so forth. That way of looking at things really offended people. It seemed so mercenary!" https://www.investors.com/news/management/leaders-and-success/gary-becker-pushed-boundaries-of-economics-to-include-social-problems/ My approach to marriage can also be labeled ‘mercenary’ according to that definition. My competitive market model of work in household production (Grossbard-Shechtman 1984, henceforth GS84) was inspired by Gary Becker’s (1973) competitive marriage market model with heterogeneous market participants.
Different:
a/ In Becker’s theory of marriage people first form couples and then organize household production. In contrast, in my 1984 EJ article individuals simultaneously make decisions regarding couple formation and work in household production. While some couple-oriented individuals seek work in household production others seek to employ a spouse who will work in household production. Where household production is shared individuals are both workers and employers. Employers and workers in household production typically have conflicting interests as to what is a fair employment relationship, a frequent source of marital conflict.
b/ My 1984 EJ article is simpler than Becker’s and most alternatives: it is an application of labor market analysis to the case of work for small non-profit firms (i.e. households). It is also more familiar to economists who have generally studied labor markets. No need for a separate economic theory of marriage or divorce.
c/ Parallels with labor economics make it easier to compare my 1984 EJ article to other models of decision-making in households. Like other competitive market models, such as labor market models, my model includes both cooperative and non-cooperative elements. The individual motivations are non-cooperative (is the baker cooperating to make us happy? Is a spouse working too hard for what he gets back?) whereas the market equilibrium requires cooperation and coordination via the price mechanism.
d/Becker (1981) uses his theory of marriage to justify a traditional division of labor. My 1984 EJ article accommodates a variety of arrangements regarding who works in household production and sexual orientation. Where gender roles are prescribed by traditional societies men tend to be the employers and women the workers and they may have incompatible views regarding the allocation of resources within the household and the need to compensate the work in household production. I support fair compensations for those who work in household production (often women). One of my recent working papers deplores exploitation of women and the violence often behind it.
1.2 My models versus models by browning, chiappori and weiss (Posted April 20, 2020)
How Browning, Chiappori and Weiss’ (2014) book Economics of the Family misrepresent my modeling of marriage
1.3 my approach versus that of Nancy folbre (POSTED april 21, 2020)
In common: (a) emphasis on how much time women spend caring for others and (b) recognition that the caring is insufficiently appreciated or rewarded.
Different: Nancy Folbre defines care work as all time spent caring for others, whether at home or in the labor market. I define Work-In-Household (WIHO) as all time spent doing activities benefiting others within the household (including caring for other adults and for shared children). My theory helps understand what determines compensation for such work by its beneficiaries (often spouses who earn more).
In common: both Nancy and I recognize similarities between undervaluation of care work at home and in the labor market.
Different: I use labor economics and general equilibrium tools to analyze how wages and prices of WIHO are interrelated because labor markets and markets for WIHO are interrelated, on both the demand side for WIHO and its supply side.
2. About the price of WIHO (added on Sept 23, 2019)
PRICES for WIHO (Work-In-HOusehold). More on WIHO here: https://www.econoflove.com/major-research-themes
Markets for commercial goods and services establish prices. Likewise, it can be expected that marriage markets also establish prices where demand equals supply. We hear about prices in marriage markets in those cultures where premarital payments are often paid prior to the wedding. Bride prices are paid by men or their families; dowries by women or their relatives. Many have analyzed bride prices, including Bronfenbrenner (1971), Cheung (1972) and Bishai and Grossbard (2010). Others have studied dowries. But what role do prices in marriage markets play in the context of the contemporary United States or other modern countries? Gary Becker (1973, 1981) viewed marriage markets as markets for people and prices in those markets as an indication of how much each spouse will access assignable consumption goods and services. In contrast, my WIHO market analysis leads to the interpretation of prices as quasi-wages measuring how much a potential or actual spouse is willing to compensate a person for work that benefits him or her, i.e. WIHO work. These wages help resolve conflicts of interest not only about who consumes what, but also about who does what. For example, prices for WIHO can help individuals organize their co-parenting schedules whether married or in another cooperative arrangement. Take the case of a wife who wants her husband to do more parenting of their joint children. Let her “pay” the husband more for his WIHO and he may switch some of his work hours from the commercial sector to the household sector. Incentives may work in this case, as they work in many other markets.
3. <<STORIES ABOUT THE PUBLICATION OF SOME OF MY ARTICLES>>
About Women's Labor Supply and Marital Choice, Gary Becker, and James Heckman (added on 3/27/2019) I recently rediscovered the correspondence surrounding my paper with Shoshana Neuman. "Women's Labor Supply and Marital Choice." The paper studies the labor force participation of married Jewish women in Israel as a function of marital sorting according to age and ethnicity. In line with my earlier theory of allocation of time in markets for labor and marriage (EJ 1984) I hypothesized that value of time, and consequently labor force participation, can vary with circumstances specific to a marriage market. Wives' traits valued in the marriage market are expected to be associated with lower labor-force participation, whereas husbands' traits valued in the marriage market are expected to be associated with higher participation rates on the part of wives. Inclusion of such traits—such as husband older than wife--increases the explanatory power of regressions of labor force participation. The theory is essential to the paper. It made me think about a possible connection between marital sorting and labor supply when no labor economist was thinking about it. I submitted the paper to the Journal of Political Economy in 1986. Jim Heckman who was then editor of the JPE (and had been one of my PhD advisors) gave me a weak Revise and Resubmit asking me to mostly drop the theory in line with the shorter referee report he included. This report suggested the theory be reduced to 5 pages and the empirical section as well. It states “A note of 10 to 15 pages might be useful since Grossbard-Shechtman and Neuman deal with important issues that are not receiving much attention.” Nice, I thought, but why a note, and not a full paper? Shoshana N. and I immediately started the revision. Soon we had a new draft that I sent to my other doctoral adviser, Gary Becker. He wrote that it is still too long and should be cut to fifteen pages. I had tried to bring the theory back in by including it in the discussion. Not a good idea, he thought. He wrote “you could cut a substantial amount from the discussion of the empirical results. I would definitely recommend that you do this.” Becker was probably the author of the short referee report. Why did he think these issues he considered important (in his report to Heckman) were only worthy of a note and not of a full paper? I will never know. But I count my blessings: the paper got published in the JPE and was not labeled ‘note’. I had to learn to write more succinctly and effectively. It was good training. I am very grateful for all I learned from these two brilliant men and for their contribution to my work appearing in the JPE. Also glad I did not give up and eventually published more of the theory in The Marriage Motive.
Exchange over my idea: "married WOMEN decide individually about taking JOBS, comparing costs and benefits of a regular job versus working in household production for the benefit of a spouse who pays you for it." Involves Gary Becker, Kathryn L. Shaw, Nancy Folbre, Barbara Bergmann and Don (now Deirdre) McCloskey (posted in 2018) Idea presented in a 1994 WSJ Wall Street Journal article by Amanda Bennett entitled "Young Women May Trade Jobs for Marriage" and based on research by Shoshana Grossbard-Shechtman and Clive Granger, winner of the 1993 Nobel prize in economics. The cited research was presented at the 1994 meetings of the American Economic Association and published in the French journal Population in 1998. Original article in French. Here is an English Translation. Further research on this topic was published in “Cohort-level Sex Ratio Effects on Women’s Labor Force Participation,” Review of Economics of the Household 5:249-278, 2007. (w. Catalina Amuedo-Dorantes) and in my 2015 book The Marriage Motive: A Price Theory of Marriage.
Defending the idea:
Gary Becker, winner of 1992 Nobel prize in economics, defending my idea, cited in the article: "I don't think feminists should get upset with [Grossbard's] work, says Dr. Becker, himself a frequent target of feminists. "I don't think they [the feminists] would want to deny that there is an economic bargaining component within marriage."
Kathryn L. Shaw, now the Ernest C. Arbuckle Professor of Economics at the Graduate School of Business, Stanford University, defending my idea, cited in the article: "Men's income does indirectly compensate women for working at home." "I don't know we can't just come out and say it. Some women do--and more women should-- think of their husband's income as compensation for things at home [the men] aren't doing."
Response to Barbara Bergmann's criticism (below) by Nancy Folbre, prominent feminist economist and past recipient of McArthur genius award, femecon 1994
Criticizing the idea: Barbara Bergmann, then Professor of economics at American University, in a 1994 post on LISTSERV by femecon (then maintained by Jean Shackelford at Bucknell.edu): the critique, posted here, ends with "SHOSHONA! TRY A LITTLE HARDER TO SHAKE THE DUST OF SEXIST CHICAGO FROM YOUR SHOES."
Response to Barbara Bergmann by Don (now Deirdre) McCloskey, prominent economist, on femecon 1994
Further discussion of the idea in the first issue of Feminist Economics , 1(1), 1995: Response by Myra Strober and my response to M Strober: https://www.researchgate.net/publication/24080892_Do_Not_Sell_marriage_short_Reply_to_strober
4. 2010: Gary Becker & Shoshana Grossbard letter exchange (posted in 2018)
Becker, August 2010. "with a few exceptions" What could these exceptions be?
