The Fairer Sex

It’s been a great week for economics with plenty of macro issues in the news. Half term has also given me lots of time to think about the microeconomics of everyday life, inspired in part by reading Tim Harford’s The Logic of Life.

On Friday I rushed, fashionably late, into Rhyme Time at my local library. My daughter and I quickly joined in a rousing chorus of ‘The wheels on the bus’ and after a few lines I realised that my voice stood out, and not just because I am appalingly tone deaf; its defining characteristic was that it was probably at least two octaves lower than anyone else’s in the room. Of the thirty plus parents there, I was the only dad!

For the parents of those children under 6 months old, this isn’t a surprise: maternity pay and conditions are substantially more generous than the 2 weeks (usually unpaid) paternity leave that fathers are entitled to. A maternity leave of 12 months is therefore not uncommon. But for the people there with older kids, why was there not a more balanced distribution of fathers and mothers?

Tim Harford points out in chapter 3 of his book that we usually make an assumption that absolute advantage can be used to best explain specialisation and trade, even on the very microeconomic scale of an individual family unit. Thus (the story has gone for generations), men are better at working and earning money while women are better at looking after children and the home. But any man risks being shot (or worse!) for stating such an opinion these days - and rightly. Because as I looked round the room another statistic niggled at the back of my mind. In fact, ‘statistic’ is probably a rather generous term for something I have noticed in the last few years: my male friends tend to earn less than their female partners.

Yes: taking out the single and gay friends I know, I believe that - on average - the women in relationships earn more than the men.

Of course, this is quite possibly a biased sample. It might be the case that the (male) friends I choose (as well as myself) represent a subset of freeloaders who have sought out more successful partners than themselves! But it is a sample nonetheless. The behaviour of men and women in the ‘marriage market’ is explored in detail in The Logic of Life; even a small shortage of men (because of either prison, sexuality, or simply disinclination towards marriage and fatherhood) can force women to make considerable compromises when choosing a partner and father for her children.

So if women are better at working than men, and better (or at least more enthusiastic) parents, the concept of comparative advantage seems more appropriate. Tim Harford puts this nicely on page 90: ‘James is a bad worker but a worse dad, so Elizabeth takes the rational decision to stay at home baking and looking after the kids, while James tries to scrape together a living as an estate agent.’ (Fortunately I do not know a James and Elizabeth who could be offended at this point!).

Of course, maternity leave is less costly for women than men. Women’s lost pay is partly compensated for by either private or state maternity packages. Thus only in households where the mother substantially out-earns the man, and where the utility derived from parenting rather than work is significantly different between the couple, will the man rationally give up work (either permanently or temporarily) to look after baby.

National data on the gender pay gap suggests that men earn more than women. But in part this is down to occupational segregation: women making up the bulk of workers in industries such as nursing and cleaning. In fact, in some US cities there is recent evidence that the gender pay gap is switching to favour women. This may also bethe case in cities such as London where there is a wider variety of lucrative work available to women workers, and where part-time and working from home options are possible even in senior positions.

In higher education on both sides of the Atlantic, there is evidence that girls are moving ahead of boys both in applying to and gaining places at top universities, and in achieving the best degrees. This should lead to higher pay for women in the future - assuming all workers, regardless of gender, choose to cash in thier human capital at somewhere near its market value. This could change the optimal pattern of specialisation within families - and the phenomenon of stay-at-home dads will continue to grow.

Of course, there could be other factors at play in the female-dominated world of Rhyme Time.

Firstly, some of the women there might not be mothers at all. As nannying and child-minding are still predominantly female-dominated occupations, this will have distorted the data: even where both parents work, it appears to the casual observer (i.e. me) that it is the mother who is looking after the child(ren).

Secondly, perhaps the alpha-females have made a compromise to work part-time in higher paid jobs while their beta-male partners work full-time, thus creating pay equality on a total (if not pro rata) basis - and providing an optimal amount of parent time for the person (usually the mother) who gains more utility from spending time with the children.

Thirdly - and something for me to explore in the next school holiday - is that maybe all the stay-at-home dads have found somewhere more exciting to go than the library. They were probably all in the pub across the road, talking about football and laughing about this one guy they just saw going into Rhyme Time.