Academia | SG

EUSTON QUAH and TAN JUN RUI (Nanyang Technological University) argue that better accounting for the value of household production would help the government design policies such as paternal leave and flexible working arrangements more prudently and fairly. This article is an edited excerpt of their chapter in the book, Why Not? Thinking About Singapore’s Tomorrow, published by World Scientific this month.

Home labour is often taken for granted, due to its unpaid (or lowly paid) and loosely monitored nature in the absence of a formal work environment. However, the time used to provide the day-to-day services of cooking, cleaning, shopping, child-rearing and myriad other household chores represents a very substantial portion of the total productive time available to members of a household and to a society. Thus, an accounting of its worth commensurate with wages earned from other employment is of increasing practical importance.

The adequacy of the GDP as a measure of economic growth and performance has always been questioned. Notably, it understates economic welfare through the omission of nonmarket productive activity, of which household work forms a large portion. A quarter of Singaporeans is expected to be a senior citizen by 2030, implying that more caregiving services will be needed in the near future.

Additionally, the time and effort spent by caregivers or housewives on children yields positive spin-offs to society. A caring mother who spends time educating her children may improve their skills and future work attributes. A stable home environment makes for a more secure society, and children from such homes are less likely to commit crime.

Discussions on the contribution of household production centre mainly on two issues: the amount produced, and the economic value attributable to the time necessary to produce it. A market for household production clearly exists due to the demand for homemakers and caregivers and supply of women who are willing to be either part-time or full-time homemakers. If left solely to market forces, household production may be underproduced and the economic contribution of housewives may be underestimated and not given its due recognition.

How can valuing household production alleviate gender inequality?

In 2020, the Singapore Government declared that gender equality should be a fundamental value. Balancing family responsibilities and flexible work arrangements are among the key aspects that warrant attention.

Singaporean females generally earn lower market wages than males — a 26 percent difference in average mean monthly earnings in 2021, according to the Singapore Yearbook of Manpower Statistics 2022. Women’s home productivity as measured strictly by the services or output that can be produced at home per unit time is commonly perceived as generally higher than that of men. Therefore, women tend to specialise in housework and men in market work to their increased common benefit and cost minimisation. Both partners are contributors to a household even though the act of one appears in cash flows and the other, in non-pecuniary household production, does not. This division of labour is said to enable the household to maximise their total real income with the husband and wife specialising in complementary activities. However, such an arrangement may be detrimental to the wife.

Firstly, the opportunity costs of giving up one’s career and being a homemaker have been increasing over the years. Improvements in female literacy rates and education over time have seen more women employed and actively seeking market work in Singapore. While Singaporean women spend less time in the market compared to men, this divergence has narrowed over time. For Singaporean women, as per the findings of the collaborative study by Ipsos and United Women Singapore in 2021, household production comes with greater perceived trade-offs to their career opportunities and quality of life as compared to men.

Secondly, while household responsibilities are typically shared between both spouses in a marriage, women are more likely to take on cleaning, cooking, and caregiver roles that are more demanding in time commitment with less flexibility in scheduling. Women may not be inherently better at homemaking than men - this may be the product of homemaking skills being imparted from their own mothers. However, the pressure of conforming to societal expectations means that there is much inertia in the shifting to men of household responsibilities traditionally associated with women.

According to the Ministry of Manpower’s (MOM) findings in 2021, most women (23.9 per cent) outside the labour force did not work because of housework responsibilities, while 14.3 per cent of them prioritised care for their family members and relatives over work. This is a stark contrast to men’s reasons for not working - only about 3.7 per cent did not work because of housework and caregiving reasons combined.

Knowing the value of household work helps household members come to optimal decisions on the allocation of time between work in the market and work at home. Once members of a family understand the economic value of their contribution to housework, this value can be used to decide whether these contributions are comparable, less than or exceed wages that they could have earned or are earning in the market. This provides a more meaningful estimate of how much women and men are willing to trade off market work and leisure time for time spent on household production activities.

Home labour is work and the home is essentially a workplace. One may argue that just like wage labour, housework is also generally performed out of love, duty and responsibility for the family’s well-being. Therefore, knowing the value of household production may help to reduce gender discrimination and stereotypes to promote a more equal allocation of home labour between spouses. For example, the husband knowing that he contributes less to the household than his wife may feel more inclined to take on some of the home labour for a more equitable overall contribution, if the cost of attempting to earn higher market wages is too high.

In the long run, such knowledge will hopefully facilitate acceptance of a family structure whereby men contribute more to non-market household labour, and women to market work, as a new gender norm rather than a deviation from the norm.

In short, valuing household production will move society closer to achieving the key milestones of the White Paper on Singapore’s Women’s Development in the areas of equal opportunities in the workplace, recognition and support for caregivers as well as mindset shifts.

Labour force participation and the economy

Measuring and valuing housework also provides a better basis for growth calculations and for international comparisons of national income.

The value of household production derived for an economy and disaggregated by age of household members, size of household, income and other household characteristics leads to a better understanding of a country’s labour supply. This will allow policymakers to come up with a better formulation of marginal income tax rates and observed changes in taxable revenue. For example, some empirical studies have shown that married women working outside the home react negatively to higher levels of taxation by reducing their paid market hours and increasing their time devoted to home production.

The information that married women’s market labour supply reacts positively to net marginal earnings gives rise to several pertinent questions: what is the magnitude of the loss in welfare associated with increases in income taxation of married women to the household? How large is the withdrawal or injection of married women from or to the market following changes in marginal tax rates? Is it likely that the tax system influences the provision of home goods and services, marriage patterns, and fertility behaviour? This is particularly important for Singapore because of its constant low fertility rate (all-time low of 1.05 children per female in 2022).

It has been argued that because national income accounts include both income and consumption which are, in effect, welfare estimates, the GDP statistic can be taken to be an indicator of welfare. But the GDP includes, among other things, market goods and services that make no obvious contribution to individual economic well-being (e.g. police firearms, anti-pollution equipment). It also excludes items which contribute to economic welfare (e.g. leisure, household services). It is thus a flawed index of a country’s economic welfare.

High or low growth rates as reflected in a country’s GDP may also be inaccurate as they ignore changes in the household economy. To the extent that home production is not measured in conventional income accounts and to the degree that the household output omitted changes over time, then both the quantity and total output are mismeasured.

During economic recoveries, the fall in household production growth indicates women exiting the household to enter the market sector, thus reducing the strains on a growing economy by relaxing the labour constraint. When more women enter the workforce to do paid work, GDP will rise, and the economy will be said to have grown. But that growth is overestimated since it comes only as a transfer of unpaid women’s work at home to paid women’s work in the market. This is because the labour force participation rate of women has been increasing over time. With increasing commercialisation of housework activities, it is possible that the total production of goods and services over time may not have changed by much.

Similarly, in periods of economic downturns, falling growth rates may not be indicative of the real state of the economy, as women may have returned to their households and now generate increased home production, where the high household sector growth helped to reduce the fall in combined GDP growth.

Legal uses

Another practical benefit lies in deriving the value of housework in legal cases involving compensation for accident victims whose family would suffer from the loss of household services normally provided by the injured victim. Such a loss is equivalent to losing part of a family’s real income. Understanding the value of household work would help victims be compensated adequately.

Singapore’s highest court considers the value of household production in a marriage when determining the division of matrimonial assets. However, because much of what goes on within households is unrecorded, such indirect and intangible contributions are likely to be estimated based on mostly self-reported qualitative claims and crudely quantified in the derivation of a ‘scoring ratio’ between both spouses.

By assigning a wage to home production that can be justifiably negotiated just like paid labour, this would empower women by effectively enforcing a less arbitrary marital contract between homemakers and their spouses. The values elicited would allow policymakers to better disentangle the value-producing labour component from the act of love or familial obligation and duty component.

In matrimonial property settlements and in divorce proceedings, information on the value of the contribution made by the spouse who does household work — whether in caregiving, cooking, cleaning, marketing, or doing the laundry — would go a long way in establishing a more equitable balance of respective spousal contribution in adjudication and litigation.

Welfare consequence

In setting the poverty line level and a measure of welfare, a rather unacceptable proposition may arise that two households with similar characteristics — size of household, location of house, number of children, type of house, etc. — and earning the same money income are deemed equally poor or rich even though one household has a full-time homemaker and the other does not. Moreover, it is not only income but also time which is a finite resource that affects well-being. A poverty line should be multidimensional in the sense that it includes the monetary value of the time deficit that homemakers face after spending time on personal maintenance, unpaid care work and employment activities. If a measure of the income and time distribution could be improved by knowledge of an estimate of the value of household produced goods and services not included in household money income, then a better measure of the distribution of economic welfare could be devised for policy purposes.

It can be argued that husbands already compensate their wives for household labour indiscriminately such as via CPF contributions and other monetary allowances. The same may apply to employers since employers pay according to the productivity of workers, and that the housewife freeing up housework time for the husband can be said to make him more productive indirectly.

However, suppose that society is willing to pay housewives and informal caregivers for their role in maintaining a liveable society. An aggregate estimate of the economic value of household production would allow for more accurate knowledge on say, how financial support for informal caregivers such as Singapore’s Home Caregiving Grant or the Seniors’ Mobility and Enabling Fund should be enhanced.

Ways to value household production

One commonly used method to value household production is to estimate the foregone wages the homemaker spouse could have earned had he or she worked in the labour market instead of spending time at home. This is known as the opportunity cost method. But this leads to questionable issues of housework value being higher for someone who is a qualified medical doctor, than for another who is a secretary.

Another method is to consider how much it would cost to hire a replacement worker, such as a domestic maid, to provide similar household services. This method has two variants: one is a generalised replacement worker, and the other, cost incurred by a team of specialised replacement workers.

The value derived from the former is deemed to be inadequate because there are clearly many household services which a replacement worker would not be able to provide, such as tutoring small children and home budgeting and planning. Using the second variant involves estimating the cost of hiring a tutor, driver, cook, cleaner and so on. But this is arguably an overestimation since a housewife is essentially a general worker, and not a specialist one.

A novel method that I first proposed in 1993 is to marry the two variants of the replacement cost, such that the major component of housework is replaced by hiring a maid, while the additional work done by the housewife and not by the maid is separately estimated. The latter would include replacement cost by hiring a kindergarten teacher as tutor and the wages earned by a manager of a small firm comprising four to six workers, since running a household can be comparable to running a small firm.

This method also proposes to correct the efficiency differences in time use for housework between the homemaker and the replacement worker such that if a maid, for example, is more efficient than a housewife in terms of time taken to do housework, then the dollar value estimated for household production would be reduced by the efficiency factor. However, the issue of quality differences in the work done remains.

The contingent evaluation method has been used, with growing success, to value other non-market goods and seems an appropriate approach to value household production as well. For example, the method could involve posing alternative contingencies to households in terms of whether they would rather pay specific amounts to reduce the time given over to household tasks, or to keep the money and do the work themselves.

One would not expect households to be willing to pay more than their own marginal opportunity cost of household production, nor more than what they expect to gain from having additional hours to home production. At most, it might be expected that households are willing to pay an amount equal to their own cost of production or up to their marginal benefit from having the additional hours.

The difference between the mean values of the households’ total willingness to pay for household production and their total opportunity cost would give a measure of the amount of welfare enjoyed by households from having household production.

Effect of the pandemic on household production

The Covid-19 pandemic raised interesting questions concerning the value of time. Time spent at home versus time spent in the office; time spent travelling to work; leisure and recreation time; time spent in treatment and hospitalisation; time spent on volunteer work; and time spent on household production.

During the pandemic, many workers, both male and female, spent more time working from home than in the office. MOM noted that 49 per cent of workers overall and more than 70 per cent of employed residents in the services and education industries in Singapore worked from home as of mid-2020.

During the circuit breaker period, offices and retail shops were mostly closed with forced work-from-home arrangements. If traditionally foregone market wages were used as a proxy measure for the value of household production, this value would be less than the full wage rates. As the time devoted to household production increases involuntarily because of reduced options in alternative uses of time, including market-work time and outdoor leisure, the value of time per hour would likely be valued less compared with pre-circuit breaker days.

A study based on the American Time Use Survey found a substantial time allocation from paid work to home production for less-educated married women with children in the U.S. during the peak of the pandemic. Based on the specialist replacement cost method, it was found that the increased value of monthly home production had partially offset the fall in GDP during that period by 9.1 per cent.

Would this involuntary and indirect increase in time spent in the household exacerbate or alleviate gender inequality? A study in Japan found a more equitable allocation of housework and childcare among both spouses accompanied by more neutral gender attitudes during the Covid-19 period. This is likely due to prolonged work-from-home arrangements, whereby spending more time at home alerted husbands that their non-market contribution is needed.

With more members of the household working from home and the shift to home-based learning, more household chores might have been inadvertently produced which could reduce the homemaker’s efficiency. For instance, having to eat lunch at home might have required more dishes to be washed and more cleaning of the house as more people were spending more time at home. Childcare centres were forced to close temporarily, which necessitated parents to take on the role themselves if hiring domestic helpers was not an option.

A study commissioned by The Straits Times in 2022 found that Singaporeans spending longer hours on paid work during the pandemic could be partly attributed to the allocation of some working time at their own discretion to care for their family members. Despite the flexibility of working arrangements, a study in India found that with the convergence of employment and household responsibilities, it could have become harder for employed women to draw the line between paid and unpaid work, as well as leisure. Consequently, housewives might have had less quality time to focus on the development of their professional and personal growth, which are important for both their material and non-material well-being.

Unemployed women or full-time homemakers might have become more self-conscious about their own abilities and lack of tangible income contribution when other members of the household were doing paid work at home but they were not. This might have created greater familial pressure for these group of women to shoulder a greater burden of household chores.

Bottom line

Feminists have traditionally championed for market work to be as accessible to women as it has been for men. This might have led to the unintended side effect of women having less time for not only leisure but also household production activities as they engage in market work. This has implications for society and the economy.

The value of household production should carry more weight. This is because it is no less important than the value of paid work and should be appropriately accounted for in the economic output of a nation. Estimates of the value of household production should be compiled periodically and weighed against the economic growth statistics provided by national income accounts. Such estimates should also be adjusted in the event of exogenous shocks which distort the value of time. In this way, society may know to what extent GDP growth can be attributable to increased labour force participation of women, or for that matter, homemakers; and policies can be designed to influence this labour force participation rate.

Attention should not only be paid to our caregiving needs but also to the needs of caregivers, given the many compromises that they must make to paid work and leisure that have competing usage for time. It is important that society recognises these trade-offs and reduces the psychological costs of women who feel that they are confined to the role of household production out of necessity, or that they are more responsible for it than men.

Accounting for the value of household production using cost and benefit methodologies, while imperfect, will still be useful to facilitate an economic and legal recognition of the value of household production. This will help the government design policies such as paternal leave, flexible working arrangements and social security benefits for both genders more prudently and fairly.

EUSTON QUAH is Albert Winsemius Chair Professor of Economics at the Nanyang Technological University, with research interests in Cost-Benefit Analysis and Environmental Economics. TAN JUN RUI is a researcher in the Economic Growth Centre at Nanyang Technological University. His current projects include the study of Singapore’s living standards and sustainability strategies.

The book, Why Not? Thinking About Singapore’s Tomorrow, is edited by Kanwaljit Soin and Margaret Thomas and pubished by World Scientific. It is available at Kinokuniya, BookBar, and the World Scientific site.

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