Family economics
Adam Smith wrote in The Wealth of Nations that wages must be high enough to support a family. He argued that without this, the race of workmen could not last beyond the first generation. Thomas Robert Malthus added his theory of population growth in 1798. He claimed that when wages rise, laboring families tend to have more children. This increase in population eventually reduces wages again. Friedrich Engels published The Origin of the Family, Private Property and State later. He viewed the monogamous family as something created by the class system. Engels expected monogamy to disappear with the demise of capitalism. He believed full freedom for women would only happen under socialism. Early marginalists like Léon Walras ignored household production entirely. They focused on market transactions instead. Stanley Jevons and Alfred Marshall also moved focus away from the home. Their basic economic unit was either the individual or the household. When they took the household as the unit, they did not study internal decisions.
Gary Becker introduced the concept of household production functions in the 1960s. His article A Theory of Allocation of Time became foundational for the field. Theodore W. Schultz captured aspects of family important for the whole economy. Schultz emphasized the production of human capital through investing in children. Jacob Mincer also helped found what is now called New Home Economics. These economists studied how members allocate time between market work and household work. They analyzed consumption decisions within the family unit. Contemporary family economics has been enriched by contributions from Marxists since the 1970s. Radical feminists added their focus on gender and patriarchy during this same period. Marxist-feminists subsequently sought to integrate these two approaches together. They tried to show how patriarchy and capitalism interact with each other. The household production function remains a main approach in the 21st century.
Shoshana Grossbard models both men and women as possibly hiring each other's work. She calls this spousal labor or Work-In-Household WiHo. To the extent that husbands employ wives' WiHo, women can be considered exploited. Robert Ellickson argued that owners of household capital should have more influence on decision-making. He contrasted this with Grossbard's proposal that those doing production should control decisions. Gary Becker analyzed division of labor in terms of comparative advantage. He generally assumed that women have a comparative advantage in household production. Men were seen to have an advantage in production outside the home. This led to a tendency for feminist economists to dismiss Becker's analyses. Other explanations emphasize risk pooling and reductions in illness risks. Marriages facilitate specific investments such as children. Legal ownership of the household remains a question related to firm analysis. Some Marxists view marriage as analogous to the employment relationship in capitalist society.
Malthus attributed fertility decisions to the age at which people get married. He also focused on how often couples engage in sexual activities. Gary Becker discussed quantity versus quality of children based on income. Studies found that fertility is negatively correlated with income levels. There appears to be no direct economic relation between the two factors. The introduction of birth control greatly affected fertility decisions. The innovation of the pill paved ways for women to pursue careers while still getting married. Contraceptives increased the breadth of decision making within families. Before, women would restrain from sexual activities even in marriages. They feared unplanned pregnancy could lead to a decline in workforce participation. Fertility might also be affected by business cycles. There is a negative correlation between fertility and business cycle fluctuations. Higher income tends to lead to the decision of having children according to perception. However, actual studies contradict this common belief about elasticity.
Participation of women in the labor market grew dramatically in the 19th and 20th Century. Jeremy Greenwood, Ananth Seshadri, and Mehmet Yorukoglu attribute this to time-saving appliances. This growth has been limited by institutional factors such as employment quotas. In England during the second half of the 19th century, working class men campaigned to restrict female market employment. Bars existed on women's employment in the United States including laws preventing work after marriage. Some countries like Japan still have quotas on market employment of married women. Barbara Bergman wrote that complete specialization leads to financial insecurity. Women who are full-time housewives face higher risks of domestic violence relative to those earning wages. When both spouses have some experience in domestic work they can be more independent. Divorce or death of a spouse becomes less devastating if skills remain shared. The game theoretic bargaining model offers an alternative framework for analyzing dynamics. It examines how power balances shift through explicit or implicit conflict processes.
Oded Galor discussed human capital fertility and growth in his economic analysis. John Ermisch provided insights into family economics within broader contexts. Gary Solon examined intergenerational income mobility across generations. Laurence J. Kotlikoff and Lawrence H. Summers analyzed the role of transfers in aggregate capital accumulation. Kathleen M. McGarry studied inheritance and bequests specifically. Families invest in children's human capital through time and other resources. They manage bequests to influence social mobility across generations. The bequest motive plays a significant role in these decisions. Decisions about quantity versus quality involve investment of parental resources. Macroeconomics of the family connects individual choices to national behavior. Matthias Doepke and Michele Tertilt explored families in macroeconomic models. These studies show how family structures impact overall economic performance over time.
Common questions
What did Adam Smith argue about wages and family survival in The Wealth of Nations?
Adam Smith argued that wages must be high enough to support a family so the race of workmen could last beyond the first generation. He stated that without sufficient wages, the working class would not survive.
When did Thomas Robert Malthus publish his theory of population growth affecting laboring families?
Thomas Robert Malthus published his theory of population growth in 1798. He claimed that when wages rise, laboring families tend to have more children which eventually reduces wages again.
How does Gary Becker define household production functions in the 1960s?
Gary Becker introduced the concept of household production functions in the 1960s through his article A Theory of Allocation of Time. His work became foundational for the field by analyzing how members allocate time between market work and household work.
Why do some Marxists view marriage as analogous to the employment relationship in capitalist society?
Some Marxists view marriage as analogous to the employment relationship in capitalist society because they see it as a system where owners of household capital influence decision-making. This perspective contrasts with proposals that those doing production should control decisions.
What impact did the introduction of birth control have on fertility decisions and women's careers?
The innovation of the pill paved ways for women to pursue careers while still getting married. Contraceptives increased the breadth of decision making within families by allowing women to restrain from sexual activities without fear of unplanned pregnancy leading to workforce participation decline.
All sources
44 references cited across the entry
- 1journalAn Economic Analysis of Polygyny: The Case of MaiduguriAmyra Grossbard — 1976
- 4journalThe F-connection: Families, Friends, and Firms and the Organization of ExchangeYoram Ben-Porath — 1980
- 9journalChild Endowments and the Quantity and Quality of ChildrenGary S. Becker et al. — 1976
- 10journalThe Trade-off between Child Quantity and QualityEric A. Hanushek — 1992
- 11bookInvesting in People: The Economics of Population QualityTheodore W. Schultz — University of California Press — 1981
- 13journalFamily Economics Writ LargeJeremy Greenwood et al. — 2017
- 20journalOff the record: Reconstructing women's labor force participation in the European pastJane Humphries et al. — October 2012
- 22journal'Never Intended to be a Theory of Everything:' Domestic Labor in Neoclassical and Marxian EconomicsTherese Jefferson et al. — 2001
- 23bookOn the economics of marriage: a theory of marriage, labor, and divorceShoshana Grossbard-Shechtman — Westview Press — 1993
- 24bookA Price Theory of Marriage. How Marriage Markets Affect Employment, Consumption and Savings.Shoshana Grossbard — Springer — 2015
- 25bookThe Household: Informal Order around the HearthRobert C. Ellickson — Princeton University Press — 2008
- 26journalRepack the Household: A Comment on Robert Ellickson's Unpacking the HouseholdShoshana Grossbard — 2007
- 27journalGetting the Better of BeckerFrances Woolley — 1996
- 28journal'Holding Hands at Midnight': The Paradox of Caring LaborNancy Folbre — 1995
- 29journalA Theory of Allocation of Time in Markets for Labor and MarriageAmyra Grossbard-Shechtman — 1984
- 31journalBargaining Models, Feminism, and InstitutionalismJanet A. Seiz — 17 October 1995
- 32journalGender and Say: a Model of Household Behaviour with Endogenously Determined Balance of PowerKaushik Basu — 1 April 2006
- 33journalEngines of LiberationJeremy Greenwood et al. — 2005
- 35bookPersistent InequalitiesAmartya Sen — Oxford University Press — 1990
- 36journalAltruism in the Family and Selfishness in the Market PlaceGary Becker — 1981
- 37bookThe Economics of the FamilyNancy Folbre — E. Elgar — 1996
- 38bookHousehold Economic BehaviorsShoshana Grossbard — Springer — 2011
- 39journalSeparate Sphere Bargaining and the Marriage MarketShelly Lundberg et al. — 1993
- 40webAn Economic Analysis of FertilityGary Becker — 1960
- 41webGary Becker on the Quantity and Quality of ChildrenMatthias Doepke — November 2014
- 42webThe Economics of the Marriage Contract: Theories and EvidenceNiko, Imran Matouschek, Rasul
- 44webOn the Economics of Marriage - A Theory of Marriage, Labor and Divorce.Shoshana Grossbard