Innovations in Gender-Aware Macroeconomic Models
Macroeconomic models are in general not fully gender aware, instead often grouping individuals regardless of gender. However, many studies have found that women and men have different economic and social preferences, caring and spending behaviors, and lifestyle attitudes. It is thus important to incorporate components into models to account for gendered differences and explain economic dynamics of gender gaps in care work, labor force participation, and growth.
Studies conducted as part of the Care Work Economy and Gender-Aware Macroeconomic Modelling for Policy Analysis (CWE-GAM) Project have found innovative ways to introduce gender-aware components into macroeconomic models to fill gaps in the existing literature.
Modeling Aggregate Demand and Supply: Growth & Gender
Braunstein et al. (2019) modeled the interaction between aggregate demand and supply to analyze the causality between growth, gender inequality, and social reproduction. The authors studied four country regime-types: 1) time squeeze, 2) mutual, 3) wage squeeze, and 4) exploitation (see Table 3).
“By proposing that we treat labor as a resource that is produced, the model and estimates presented illustrate how care and social reproduction can have macroeconomic consequences independent of their effects on women’s work participation, and that the gendered structures of care provisioning are elemental to paths for development and growth.”
Braunstein and Tavani (2020) additionally studied country circumstances through “evaluating the equilibrium effects (on gender wage equality, output, and investments in care) of three interventions for gender equality: the direct provision of public care services that increase women’s paid employment; the provision of cash allowances that increase women’s take- up of market-provided or private care services; and an increase in women’s participation in paid labor.”
“The setup focuses on the rate of capacity utilization as a measure of economic activity and gender wage equality as a measure of income distribution:
- The producer’s equilibrium features a direct relationship between economic activity and gender wage equality.
- The goods market equilibrium can be either care-led or inequality-led, depending on the relationship between labor’s share of income and demand for investment in human capacities versus investment in physical capital.”
They have found that higher gender wage equality and output have divergent outcomes for labor shares that manifest in differing investments in care. However, gender wage equality improves in both cases.
Gender-Aware SAM & CGE Model: Growth, Fiscal Policies, Norms & Gender
Studies argue that production activities, labor factors, and representative households be disaggregated in the SAM (Fontana et al. 2020). Lofgren et al. (2020) extend a SAM for gender and care analysis in Korea “to cover household (non-GDP) service production; and its single household was disaggregated into three types, defined to differ in care needs: households with children with head in working-age; households without children with head in working age; and households with the head above working age.”
Fontana et al. (2020) emphasize the need for:
- Labor factors to be disaggregated by gender, skill, age, place of residence, immigration status to capture intersectionality;
- Representing the non-market care sector and its interaction with market sectors;
- Modeling women’s constraints (e.g. care-related social protection and care provision) over the life-cycle through dynamic CGGEs.
Gonzalez Garcia et al. (2020) constructed a model with long-term care and gender, underlining that social norms are endogenous to policies. “Patriarchal norms in particular prevent a fairer distribution of housework and care work, even if the gender wage gap falls. The unfair division of unpaid care work in turn increases the gender wage gap and creates gender-unequal equilibrium outcomes.”
“One of the key pillars for reducing and redistributing unpaid care work is the role of public investment in quality care services and care relevant infrastructure […] Improving the productivity in the care sector is needed to decrease the households’ effective costs of purchasing paid care services” (Gonzalez Garcia et al. 2020).
Workers must be allowed to be caregivers while continuing their professional achievements. Recommended policies include:
- Tax-funded paid parental leave for fathers as well as mothers
- Flexible work hours
- Paid family leave
- Creation of workplace cultures respecting the caregiving responsibilities of women and men
This blog was contributed by Aina Krupinski Puig, Research Assistant for the Care Work and the Economy project.
Braunstein, Elissa, Stephanie Seguino, and Levi Altringer. (2019). “Estimating the Role of Social
Reproduction in Economic Growth.” Care Work and the Economy (CWE-GAM), Program on Gender Analysis in Economics (PGAE), American University. https://doi.org/10.17606/RV6P-6F66.
Braunstein, Elissa, and Daniele Taviani. (2020). “Gender Wage Equality and Investments in
Care: Modeling Equity and Production.” Care Work and the Economy (CWE-GAM), Program on Gender Analysis in Economics (PGAE), American University. https://doi.org/10.17606/KR5J-M452.
Fontana, Marzia, Binderiya Byambasuren, and Carmen Estrades. (2020). “Options for Modeling
the Distributional Impact of Care Policies Using a General Equilibrium (CGE) Framework.” Care Work and the Economy (CWE-GAM), Program on Gender Analysis in Economics (PGAE), American University.https://doi.org/10.17606/G155-C715.
Gonzalez Garcia, Ignacio, Bong Sun Seo, and Maria Floro. (2020). “Norms, Gender Wage Gap
and Long-Term Care.” Care Work and the Economy (CWE-GAM), Program on Gender Analysis in Economics (PGAE), American University. https://doi.org/10.17606/7E2K-1508.
Lofgren, Hans, Kijong Kim, Marzia Fontana, and Martin Cicoweiz. (2020). “A Gendered Social
Accounting Matrix for South Korea.” Care Work and the Economy (CWE-GAM), Program on Gender Analysis in Economics (PGAE), American University. https://doi.org/10.17606/T5MZ-7M49.
- Published in Economic Modeling, Gender-Aware Macromodels, Macroeconomics, Policy, Social Care Systems, Unpaid Care Work
Lessons to Draw From Countries with Long-Term Care (LTC) Systems
Japan, Korea and Germany introduced universal, mandatory public long-term care insurance (LTCI) as their populations began to age. LTCI is a social insurance program that covers the cost of care in case people need assistance to manage their daily living activities. In these countries LTCI covers a broad range of activities for daily living associated with aging and disability, from light home-helper services to intensive institutional care. The coverage is available for any level of care need, not simply for the most severe cases of disability.
These countries serve as good examples of countries that have paved different paths by focusing on the continuum of care, public insurance system and regulations. Japan, Korea and Germany share a couple of basic principles in the set-up of the financial mechanisms for LTCI:
1) a universal public social care system dedicated to LTC; and
2) a continuum of care system, starting from light home-based services all the way to intensive institutional care.
In developing LTCI, governments also developed regulations to cover how care needs could be assessed and by whom, who can provide care and under what conditions, the costs of care services, and the training, skills and wages of care workers. Government regulation is also important to ensure good-quality, accessible LTC.
With COVID-19, we see that the benefits of the continuum of care principle extend beyond economics and quality of life: this approach also removes people from the types of multi-residential locations that are most prone to the rapid spread of infection.
Many of our international peers have been more active and thoughtful with LTC policies than Canada, and we have lots to learn as we go about reforming our LTC systems. This system would help people with activities of daily living where they need it, and it would not cost the government much more than what it is spending now. Further, Canada also needs to develop a better set of regulations if we want to ensure good-quality and accessible LTC for all.
Original article “We can draw lessons from countries with strong long-term care system” was published in Policy Option, the digital magazine by the Institute for Research on Public Policy (IRPP), June 5, 2020.
This article is part of the Facing up to Canada’s long-term care policy crisis special feature.
This blog was authored by Ito Peng who is part of the Care Work and the Economy research group Understanding and Measuring Care.
- Published in COVID 19, Long Term Care, Social Care Systems, Understanding and Measuring Care