Discussion about this post

User's avatar
Christopher B's avatar

I see where you're coming from but I'm not entirely convinced. To extend the old jib against Kenysians, just because the government lets out a contract for a construction company to dig a hole and a contract for another company to fill it up again, instead of directly employing the guys with shovels doesn't mean there was anything productive accomplished even if the former situation has all the hallmarks of happening 'in the market'.

You're making the assumption that the surgeon would have spent the hour mowing the lawn performing surgery, i.e compensated work. I think it's equally reasonable to assume she could have spent that hour reading a book, or playing a musical instrument, or running. She could have also have spent that hour at a museum or play or musical performance, which would also have generated some GDP but less than an hour of her performing surgery, but we don't try to account for the difference between the two.

Part of Theil's, and many other people's arguments, about the effect of second jobs on GDP is that a person with a non-working partner has to demand compensation sufficient to support their dependents. I think that makes it something of a misnomer to say that the stay-at-home spouse was uncompensated. They are being compensated by the working spouse in the same way a child care provider would but he's absolutely right that those intra-family transactions were not captured in GDP historically. So we're comparing GDP measured using family units against GDP measured by individual activity. If we deconstructed historical GDP to account for the intra-family transactions we might very well see the lower levels of growth.

Expand full comment
forumposter123@protonmail.com's avatar

Some people are trying to define GDP one way, and you're trying to define it another. You're talking past these people by ignoring the concept they are trying to get at, it's not clear you're providing a new insight by doing so.

What we observe in the real world is that uncompensated childcare is highest amongst low and high skill people. Low skill people can't afford daycare. High skill people can afford to live on one income. It's the wives of the wealthy, usually themselves high skill and potentially high earning, that have a higher stay at home rate than the middle class. In this sense we could call being a SAHM a superior good as shown by revealed preferences.

Talking to most actual parents, it seems that there are three things that keep women in the workforce when they have young kids.

1) Two incomes only way to afford basic necessities (especially real estate).

2) Worry that if one takes a break for five years they won't be able to get back into their career (impact after returning rather than lost wages during).

3) Even when adequate, husbands income not reliable enough to risk it all on single income.

The net result of turning childcare from something with low marginal cost (a parent watching three kids instead of two doesn't cost anything more) to something linear (each additional kid costs more daycare) has the effect of deeply depressing fertility. Perhaps daycare is part of the general trend to pull forward consumption to the present at the expense of the future (when you have a lot of grandkids).

Expand full comment
37 more comments...

No posts