Gender, Bargaining, and Build Back Better

Nancy Folbre
22 November 2021

Some Notes from Panel on The Economics of Gender and Households, Southern Economic Association, November 22, 2021

This, a great  opportunity to cross-fertilize with some excellent economists who represent a variety of different theoretical and empirical approaches to gender and households. At this point in time, Biden’s Build Back Better plan is moving through a torturous political process. Whatever you think of the specific proposals, you might agree that it represents an opportunity to think harder about care for family and community members as a public good that requires public investment. I’m disappointed with the media coverage of the bill, which makes so much of the dollar cost and not enough of its economic value—there’s been little effort to estimate the dollar value of improved efficiency of care delivery when unpaid and paid work are flexibly combined and equitably rewarded.

I think of willingness to provide unpaid care for others (whether for children, the elderly, people suffering disability or illness) as part of an implicit and elastic safety net, whose important role has been highlighted by Covid-19. It is not an infinitely elastic safety net, and it is becoming increasingly brittle. I believe we are, as a nation, engaged in a process of collective bargaining over the distribution of the costs of care and that this process resembles that which takes place in many households. I outline this point of view in my recent book, The Rise and Decline of Patriarchal Systems: An Intersectional Political Economy, and I’ll summarize it here.

We often gain from cooperation with each other but nonetheless compete over how the gains to cooperation will be distributed (for more on this, see John Rawls and Amartya Sen on cooperative conflict). Our share is largely determined by our fallback position or next-best alternative. Our next-best alternative is partly determined by our personal capabilities, which are partly a function of our own human capital and partly a function of the groups to which we belong, such as our gender, race, citizenship, class, etc. Our fallback position is also determined by our ability to capture the economic benefits of the activities we engage in. A person can be a great caregiver–helping produce, develop, and maintain the capabilities of others, creating large social benefits. Ability to capture these benefits, however, is limited.

People caring for children, children caring for parents, people caring for each other, people working in care jobs like child care workers, elder care workers, doctors, nurses, teachers, often derive significant emotional benefits for their work. The remuneration they receive, however, is much more closely linked to their bargaining power than to the social value they create.

In my opinion, our profession has not devoted enough attention to public goods—things that are difficult to price, whether because they are non-rival, non-excludable, or simply difficult to measure. We haven’t looked hard enough beyond the market, or appreciated the extent to which market-driven processes have led to the deterioration of our social as well as our meteorological climate.

How does this relate to household bargaining and gender inequality? It has long been observed that women tend to specialize in activities that are less “fungible” than those men specialize in. As a result, they are more economically dependent on men than vice versa. Couples engage in cooperative conflict—and feasible distribution within couples is determined by the set of points in which both are better off as a result of continuing their cooperation. What determines the specific allocation? Many different solutions have been suggested—but all of them respect the importance of fallback positions. Marjorie McElroy first pointed to the impact of institutional factors—which she dubbed “extra-household environmental factors” –on fallback positions. Examples particularly relevant to mothers  include a child tax credit, paid family leave, and subsidized childcare (in other words, Build Back Better).

These institutional factors could also be interpreted in the terms of the supply/demand framework that Shoshana Grossbard has developed. Anything that increases the potential economic independence of women shifts the demand for husbands down, and therefore reduces their “price,”—they are likely to get a smaller share of the gains from cooperation, even if the total gains go up. Bringing social institutions into the household bargaining picture does not vitiate the role of individual optimization—it simply adds in a component of collective action. Groups based on social identity (including women and men) devote time and energy to social institutions that are likely to improve their own collective fallback position.

In an October opinion poll conducted by Quinnipiac University, 64% of women, but only 50% of men, supported the Build Back Better initiative. Women represent a majority of U.S. voters, but our collective bargaining power remains weaker than that of men. Economists should think harder about what this implies.

One comment on "Gender, Bargaining, and Build Back Better"

  1. Bootstrap Media Preview

    This was an eye-opener. Women, historically have been actually burdened with a lot of socio-psychological responsibilities time and time again. However, it’s shocking to see that a bill that could actually make lives easier be not supported actively. As always the benefit of the action is greater than the action itself. Bringing a bill that will make lives better into the household means that it does not become an issue of the home. It immediately becomes a method of division. A unit divides into individuals weighing in their opinions to make a collective decision. As you said, “Groups based on social identity devote time and energy to social institutions that are likely to improve their own collective fallback position.”

    Everyone tends to look out for themselves, but in doing so they leave out the most important parts for the “greater good”.

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