In English, Incentives make you want to do something you otherwise wouldn’t want to do. Today let’s talk about an incentive which is in the media at the moment, the oft criticised, proposed marriage tax break.

The plan is essentially an easy one. Cut the costs for people who want to get married via a tax rebate, and it makes sense. There is a lot of evidence to support the claim that marriage is good for society.

As the Telegraph reports

The statistical evidence is overwhelming: children brought up by two parents do much better, on average, than children brought up by just one. They are less likely to drop out of school or end up in prison, and more likely to pay taxes and remain in employment. This is not to deny that single parents do an excellent job and raise children who grow up to contribute much to society. It is simply to point out that across the population as a whole, two-parent families are more likely to achieve that result – and couples who marry are five times more likely to stay together, and provide that positive environment, than those who cohabit without any public commitment.

We all benefit from well-adjusted children, who are ‘polite, well educated and contribute to society’ this is what economics calls an ‘externality’ a benefit by a party that is not directly involved in the transaction. Parents are paying an extra  cost which we all benefit from.

Well the first is the claim by Ed Balls that the tax is “trying to socially engineer family life through a tax policy… [it] is hugely expensive and unfair.”. An economist would claim however that “Ahhhh! All taxes change peoples behaviour”  and The Working Families Tax Credit increased the benefits available to single mothers who sought employment thus penalising women who stayed home to look after their children or who remained with their husbands.(the latter claim being VERY  VERY contentious)

The second claim is that the credits “could stigmatise children” whose parents are not married. Again many feel that this is false by providing tax incentives for marriage it is difficult to see how it would  “stigmatise” the children of the unmarried, any more than providing incentives for single parenthood would “stigmatise” those whose parents live together.

There is of course one issue with the above arguments, they all involve children,  supporting and subsidising ALL married couples regardless of their parental status, in effect , penalises everyone else. So should the ‘tax break’ be administered to just  married couples with children? I don’t know?  Of course, nothing will replace a loving, stable, family; interested in their child’s upbringing and this is something that no taxbreak can fix.

Photo by spud on Flickr

The 12 days of Christmas, a popular Christmas song, begins with the line ‘On the first day of Christmas my true love sent to me’. An American investment group PNC Wealth Management compile a Christmas Price Index (CPI) every year. Taking the meaning of the song quite literally they calculate the cost of true love.

Rather shockingly, in 2008, the cost of buying ‘seven swans-a-swimming’ rose by 33.33% and will now set your true love back $5600. This has been put down to their scarcity. However, the cost of nine ladies dancing remained the same from the previous year at $4759.19.

According to PNC, buying all 364 items will cost you true love $86608. But then you have to think of what to do with 12 partridges in pear trees!

Listen to the interview

Download audio file (papps128.mp3)

Married women work more hours in the labour market when they face a high likelihood of divorce: for example, a woman who is unhappy with her marriage will work on average 283 hours more in the following year than a woman who is very happy with her marriage. In contrast, married men are unaffected by the probability of divorce.

These are among the findings of new research by Kerry Papps. The study also finds that both single men and single women work more when they have a high chance of marrying in the near future.

These findings are generally consistent with the idea that people take account of their future wellbeing and specialise when they are married by working either in the labour market or at home. If a married woman who maintains a household believes that divorce is impending, she will wish to enter the labour market or increase hours of paid work, because this will allow her to acquire more work experience and boost her potential income in the future, when she may be forced to rely on her own resources.

Labour force participation among married American women increased steadily for four decades from 1950, largely due to major increases in the wage rate paid to women. During the 1990s, however, this growth stalled, despite unprecedented wage gains for married women over the decade.

At least part of this and other inconsistencies in the wage explanation is likely explained by changes in divorce rates, which peaked in the early 1980s in the United States, along with the UK and other western countries, after two decades of increases.

This study analyses data from the National Longitudinal Survey of Youth, which focuses on a representative sample of Americans who were teenagers in 1979 and has asked a wide range of questions every one or two years since. A fundamental problem is how to measure a persons chance of marrying or divorcing, as this obviously cannot be directly observed.

The paper takes three different approaches to estimating probabilities of changing marital status, all of which yield the same conclusions:

• First, marriage and divorce rates among people with similar demographic characteristics are used.
• Second, whether or not a survey respondent changes marital status in the year following any interview is used to form probabilities of marriage and divorce. A complication with this approach is that work decisions are likely to influence the likelihood of marriage or divorce in the future, necessitating the use of statistical techniques to deal with the possibility of causal relationships in two directions. Doubling a womans probability of divorce will result in her working 60 additional hours a year, all else being equal.
• Finally, an innovation of this study is to measure of the risk of divorce by using peoples evaluations of how happy they are with their marriages. This avoids many of the problems of the other approaches. The results are statistically significant and are striking: a woman who is unhappy with her marriage will work on average 283 hours more (or 6 hours per working week) in the following year than a woman who is very happy with her marriage.

The evidence indicates that there are two distinct dimensions to the relationship between work hours and the risk of divorce. Woman in demographic groups that suffer from high divorce rates tend to work long hours over their entire lives. Meanwhile, individual married women also respond to unexpected increases in the likelihood of divorce from year-to-year by increasing the hours they spend in paid work.

These findings point to an unexpected negative consequence of a falling divorce rate and imply that this may hamper government efforts to increase labour force participation among married women. If current trends persist, ever-larger wage gains may be needed to induce more married women to enter the workforce.

Notes for editors: The Effects of Divorce Risk on the Labour Supply of Married Couples by Kerry Papps was presented at the Royal Economic Societys 2007 annual conference at the University of Warwick, 11-13 April.

Kerry Papps is at Cornell University.

For further information: Romesh Vaitilingam on 07768-661095 (email: romesh@compuserve.com).

Find more papers by Kerry Papps at EconPapers and search for more Internet resources on the issues of women and economics and labour economics.

That was the central message of Professor Paul Seabright when he delivered the 2005 Royal Economic Society Public Lecture on Thursday 8 December in Edinburgh and again on Friday 9 December in London.

Professor Seabrights lecture took his audience through a tour of the many ingenious strategies that males and females have used to manipulate their partners and rivals, from primates to prehistoric humans to modern men and women. He concludes:

Cooperative man was the key to our civilisation but he has used his success to isolate, confine and control the women in his life.

Throughout the animal kingdom, relations between the sexes involve a fascinating mix of conflict and cooperation, and human beings are no exception. In nature, the females of each species control scarce biological resources for access to which males have to compete. Why then have men controlled more economic resources than women, in almost all societies and at almost all periods of history?

Females are defined in nature as the sex whose eggs are scarce relative to the abundant sperm of males. The result is intense competition among males for access to these scarce reproductive opportunities. In response, males of many species including our own have evolved to be, on average, more competitive, more violent and more inclined to take risks than females.

Sometimes this competition is purely among males they compete to be first in the queue to mate with females, who have little choice in the matter. Sometimes the competition is to impress, persuade and charm females, who have a good deal of freedom in choosing among rival suitors.

The lecture looked at evidence suggesting that until quite recently in our evolutionary history, human females had a lot of choice over their mates, and comparative freedom in their social and personal lives. That choice has been progressively eroded since we stopped being hunter-gatherers and settled down to farming. Women have been confined and controlled, though to very different degrees in different societies.

Why? The answer, paradoxically, lies in the very capacities that have made for human beings extraordinary economic, social and military success in the modern world our ability to cooperate.

Cooperation on a large scale has been honed by our activities of hunting and making war. These are overwhelmingly masculine activities and the skills that men have developed in these domains has been turned against women, the development of whose coalition-building skills have been much more constrained by the biological and social circumstances in which we evolved.

So what should be womens response? Professor Seabright comments:

Women too need to refine and apply their coalition-building skills. The changing nature of modern industrial production is also raising womens bargaining power the information economy needs women who cooperate with men out of motivation rather than compulsion.

Learning from our biological evolution is the best way to move towards more humane and cooperative relations between the sexes in the 21st century.

For further information: contact Romesh Vaitilingam, RES Media Consultant, on 07768-661095 (romesh@compuserve.com)

The 2005 Royal Economic Society (RES) Public Lecture, The Biology and Economics of the Sex War by Professor Paul Seabright, was delivered at the Royal Society of Edinburgh at 3.30pm on Thursday 8 December and at the Royal Institution in London at 3.30pm on Friday 9 December.

Paul Seabright is Professor of Economics at the University of Toulouse. Before that, he taught at the Universities of Oxford and Cambridge. His book The Company of Strangers: a Natural History of Economic Life, which was on the shortlist for the 2005 British Academy Prize.

Find more papers by Paul Seabright at the EconPapers. Intute: Social Sciences also links to more resources on the issues of gender in economics and Women and Economics.

Differences like this in spouses spending of time and money mean that on average, women obtain only 40% of a couples wellbeing.

These are among the findings of new research by Helene Couprie, published in the latest Economic Journal. Her research, which draws on data from the British Household Panel Survey, also finds that such gender inequalities within the household have a significant influence on gender inequalities in the workplace and vice versa.

British women made substantial advances in terms of gender equality during the twentieth century. The right to vote, to use birth control, to have equal access to education and to the workplace are all established. As a consequence, observable economic indicators such as the falling gender pay gap suggest that gender inequality has declined and could disappear by the end of this century.

But should we be so optimistic? Maybe not. Gender relations in the private sphere are still based on a persistent segregation of gender roles in the family. This leads to a less visible gender inequality in terms of sharing the burden of housework and childcare, which has indirect consequences for inequality in the workplace.

Moreover, both types of inequalities are strongly related: the persistence of gender inequality in the public sphere may explain the persistence of gender inequality in the private sphere and vice versa.

What is the level of gender inequality in the average British family? This study develops a tool to measure the level of gender inequalities in the private sphere of family life. The principle is to evaluate and compare the wellbeing of spouses, which consists of time and money. The evaluation is based on observation of the division of labour mechanism of couples and takes into account the fact that individuals may place different values on free time, housework and consumption.

The research finds, for example, that women have more taste for housework than men: single women spend on average 10 hours a week on housework whereas single men only spend 7 hours a week.

But as soon as men and women form a union, there is a specialisation of labour: women tend to spend more time on housework (15 hours a week) whereas men react in the opposite direction (5 hours a week).

Controlling for the difference in tastes, the study calculates that the share of housework and paid work among British couples leads to household inequality. Women obtain on average only 40% of the couples wellbeing.

The research also explores the links between gender inequalities in the public and private spheres. On one hand, the division of labour within families may explain the influence of household inequalities on gender inequalities in the workplace. The specialisation of women into housework may explain why women accumulate fewer skills on the labour market and tend to be less productive or choose to lower their hours of labour market work. This has a direct consequence for the wage gap.

On the other hand, gender inequalities in the labour market tend to worsen household inequalities. It appears that 80% of household inequalities are driven by differences in the labour market wage rates between spouses. Clearly, the links between household inequalities and gender inequalities in the workplace are really tight.

ENDS

Notes for editors: Time Allocation within the Family: Welfare Implications of Life in a Couple by  Helene Couprie is published in the January 2007 issue of the Economic Journal.

Helene Couprie is at the University of Toulouse. Read more about her research at IDEAS or Econpapers

For further information: contact Helene Couprie on +33 5 61 12 85 45 (email: helene.couprie@univ-tlse1.fr; or Romesh Vaitilingam on 07768-661095 (email: romesh@compuserve.com)

Follow the coverage of this story at Google News or find more Internet resources on the issue of household economics at Intute: Social Sciences including the blog