While policy makers debate on how to integrate the informal into the formal economy, one important dimension has gone largely ignored: unpaid household work by women(REUTERS)
While policy makers debate on how to integrate the informal into the formal economy, one important dimension has gone largely ignored: unpaid household work by women(REUTERS)

We must quantify the value of women’s unpaid work

It’s both good economics and good public policy to correctly measure women’s contribution to the economy.
By Rupa Subramanya
UPDATED ON JUN 23, 2019 07:43 PM IST

In all the many controversies swirling around the measurement of gross domestic product (GDP) in India, most criticisms suggest that the new official GDP statistics overestimate the actual value of economic activity. While there is merit to these criticisms, there’s one important respect in which GDP is almost certainly highly underestimated, the value of non-market or unrecorded activity.

The largest chunk of such activity is the vast informal sector, which maybe worth as much, if not more than, measured GDP itself. While economists and policy makers debate on how to better integrate the informal into the formal economy, one important dimension has gone largely ignored, which is unpaid household work by women.

This is the flip side of women’s low labour force participation, which is among the lowest in the world in India, even when measured against other developing economies. Women who are not in the workforce, are not sitting at home enjoying leisure, they’re engaged in child and parent care, cooking, cleaning, and performing sundry other household chores.

The world over, the fact that women’s household work is unpaid and, therefore, unrecorded as part of GDP understates women’s contribution to the economy. For example, the UK’s Office for National Statistics estimated in 2016 that Britain’s GDP is under measured by about $1.6 trillion, worth almost two-thirds of official GDP. Imagine how potentially large this number could be where women do the bulk of household work and a large part of economic activity falls outside the market. According to data from the Organization for Economic Cooperation and Development, women in India spend on average almost six hours a day doing household work, at least 40% more than women in China or South Africa and almost six times as much as Indian men. Recently, the National Sample and Survey Organization (NSSO) has recognised the problem, and is attempting to measure at least the value of cooking and cleaning by women at home.

It’s both good economics and good public policy to correctly measure women’s contribution to the economy, a case I argued as long ago as 2012 in the Wall Street Journal. In a still heavily patriarchal society, publicly acknowledging through official statistics women’s vital economic importance can play a role in empowering women and increasing their sense of self worth, particularly among under privileged and poor communities, in which the vast bulk of household work is performed by women. As a matter of public policy, schemes targeted at poor households can and should be fine tuned by recording the value of women’s work. Finally, as a matter of macroeconomics, capturing women’s unpaid labour would give a truer picture of GDP and, therefore, a more realistic assessment of the size of the economy and of economic growth.

The real question is not whether we should measure the value of women’s work but how does one accurately do this. The NSSO survey is a start but any attempt to measure the value of non-market activity faces a conceptual issue, which is what price should be imputed for such work. The answer is not obvious and could range from zero, if a woman’s best alternative use of her time is to enjoy leisure, to potentially a very large number, if the alternative is that she has forgone a well paying job. But these are the standard range of difficulties encountered by national income statisticians and is not a good reason for not measuring women’s work.

Facing ire over the GDP controversy, the Narendra Modi government could send no better signal about its seriousness in measuring GDP than making a credible effort at quantifying the value of women’s unpaid work. Not only would this give a boost to the measured level of economic activity, and a start to measuring the importance of a key component of the informal sector, it could only burnish Modi’s well-deserved reputation as a champion of women’s causes, and telegraph the need to move from the informal to the formal if the Indian economy is to succeed.

Rupa Subramanya is an economist based in Mumbai

The views expressed are personal

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