Are we undervaluing women's role in the economy?

Economics has a woman problem. It’s not just that women co-authors get shafted when up for tenure or ignored by the media. There’s also problem with how economists value women’s role in the economy. The kind of work that generally falls on women, child and house care, isn’t counted in GDP. This not only undercounts valuable economic activity, it marginalizes how much women contribute. The Economist has called for greater recognition by forming a distinct branch of economics, feminist economics, devoted to women’s role in the economy.

A separate field for women undermines the problem it’s trying to address. If properly accounted for, women would contribute more than 50% to the economy. Why should their contribution be relegated to a sub-discipline? It should be the norm to account for all areas of economics. Each existing sub-discipline, would be richer if it was smarter in how it captured women. Financial models, which measure and price risk, would be more accurate if they accounted for how women view and take on risk. Labor economics could better understand trade-offs women make when they have children.

This is not an appeal to make economics more women-centric; there are important economic reasons to include women’s work more completely. For instance, quality parenting increases (pdf) the future earnings and productivity of your children. This can improve future growth and make the economy more competitive. Yet if a woman (or man) takes time work off to raise children, it does not count toward current or future GDP. Parenting offers what an economist calls a positive externality, a cost or benefit the decision maker doesn’t account for, in this case how much good parenting now enhances future growth. Maybe if we included these values in GDP and growth projection, it would be easier to craft policy that rewards diverse forms of unpaid work.

Economics has further to go to make these calculations standard. But it is important to also celebrate how much the profession already has contributed to our knowledge on the value women bring to the economy. Recent research deconstructed the pay gap, how much is women driven by women’s choices (time off work, opting for lower paid fields and degrees) and how much is actually discrimination. We need data like this to parse out what programs will lead to equal pay, and what policies can have unintended consequences that discourage employers to hirer fewer women.

Several papers have concluded that making child care more affordable—rather than just handing families cash—induces women to have more children. Papers like this have important policy implications that can lead to true equality, why marginalize them into sub-discipline? A better question is why these papers rarely makes it into the public discourse, let alone policy. Perhaps the issue isn’t the economics profession, it’s that policy makers, on both political sides, are reluctant to embrace economic research and craft policy that can achieve true parity.