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Fridays Academy: Gender and Macroeconomics

Ignacio Hernandez's picture

As usual on Fridays, from  Raj Nallari and Breda Griffith's lecture notes.

Engendering Macroeconomic Models

Ça?atay (1998) identified three ways in which models can be useful for integrating gender into macroeconomic models. First, models that encourage theoretical precision are instrumental in organizing knowledge and giving direction to research by focusing on the types of data that need to be collected. Second, models foster communication with the mainstream economics profession and may influence and/or change prejudices. Third, models inform policy-making and have practical implications.  Against these three premises, Ça?atay offers four approaches to gender-aware macroeconomic modeling, discussed below.  


The gender-disaggregation method relies on disaggregating existing macroeconomic variables by gender. This first method depends on the structure of the economy.  For example, disaggregating investment by gender in an economy dominated by small producers yields more information than in one dominated by large capitalist or public enterprises where ‘gender differences in behavior will be more subtle and less uniform’ (Ça?atay, 1998; p. 12).  It is best-suited to economies where men and women control separate streams of income and undertake separate productive investments.  Moreover, the fact that such models do not include the reproductive sector, they therefore cannot take into account the causal links between the productive and reproductive sectors.  In terms of precedent, the gender-disaggregation approach may be modeled similar to class in the classical/post-Keynesian macroeconomic models. In the latter, the savings behavior of capitalists and workers are considered different because of their different institutional position.     


The gendered-macroeconomic variable method introduces economic variables that capture gender relations.  For example, gender inequality is thought to predicate the behavior in labor markets, in credit markets, in decision making at the level of the household and in the public and private sector (Ça?atay et al., 1995; p. 1830).  Taking this into account will change the outcome and/or policy prescriptions of the model. For example, introducing unpaid labour into the Revised Minimum Standard Model of the World Bank would change the value of the capital output ratio – a ratio that is considered the principal gauge of overall efficiency.  Similarly, the savings rate is known to have clear gender dimensions, allowing for this in macroeconomic models will yield different outcomes for consumption and the overall savings rate.  


The third approach is the two sector – system method that divides the economy into productive and reproductive sectors.  The productive sector includes the traditional macroeconomic variables while the latter includes unpaid labor, non-monetized goods and services, and human resource networks. The objective of such models is to focus on the interactions between the two sectors and various approaches are considered. Ça?atay (1998) references Taylor (1995) who examines the feedbacks between the variables in the two sectors using a social accounting matrix.   


The fourth approach considers combining two or more of the previous methods.  The table below summarizes two studies that make use of one or more of the above methods.


 Combining macroeconomic models in studying gender relations

Source: Ça?atay, 1998.


 In summary, the methods of introducing gender into macroeconomics models focus on incorporating inter alia gender disaggregation of the data; gender relations in macroeconomic variables; the reproductive sector; and/or a combination method.  These methods will be examined in further postings.