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Macroeconomics, gender, and labour markets. James Heintz , PERI, University of Massachusetts Expert Consultation on Women’s Economic Empowerment SOAS, University of London, Jan. 26-27, 2012. Rethinking the Role of Labour Markets.

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Macroeconomics, gender, and labour markets

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    1. Macroeconomics, gender, and labour markets James Heintz, PERI, University of Massachusetts Expert Consultation on Women’s Economic Empowerment SOAS, University of London, Jan. 26-27, 2012

    2. Rethinking the Role of Labour Markets • Broadening the conceptual framework: how is labour exchanged? • Demand-side constraints and informality • The inherent imperfection of labour markets • Macroeconomics, growth, and labour

    3. Common Approaches • Labour economics: often based on wage employment. Focus: determinants of earnings. Mincer-type wage equations. Gender frequently enters as a dummy variable. • Enterprise-based approaches: focuses on self-employment. Estimate production functions: labor, capital (human & fixed) as productive factors. Abstracts from other constraints, including gender-based constraints. • Limited productive capital in many such enterprises (working capital may be more important). Particularly true for women's enterprises/activities. • Individuals exchange labour through a variety of markets. A range of institutions/constraints affect this exchange.

    4. How is labour exchanged? Broadening the concept of labour markets. • Consider women’s self-employment. With few capital inputs, women are effectively selling their labour, but the exchange is frequently mediated by other markets (suppliers, consumer markets). • Better understood by including these markets and related institution into a consideration of ‘labour markets’. • These details are lost in a narrow labour-based or enterprise-based approach. • Unpaid care work – also critical.

    5. Demand-side of the ‘labour market’ • Labour demand constraints affect labour market outcomes: informality, either overly short or overly long hours of work, open unemployment, etc. • But the standard downward sloping labour demand curve is overly narrow (wage employment, labour cost focus) • Examples of sources of demand constraints: • Lack of access to markets (including domestic markets) • Insufficient investment/capital accumulation in formal sector • Macroeconomic environment • Self-employment and the importance of derived demand

    6. Gender and labour demand • Due to segregation of activities, unequal demand for women's market labour relative to men's labour (e.g. women crowded into activities in which demand may be 'saturated'). • Affects returns to women’s market (remunerative) labour.

    7. Inherent imperfections • Getting labour markets to approximate a perfectly competitive ideal is not as good of a strategy as getting labour markets to work better. • Many sources: information asymmetries, social norms, barriers to perfect mobility, transactions costs, market power, contested exchanges, and gender dynamics. • Goal: labor market institutions which enhance individual choices, provide adequate income/living standards, address unequal market power (social protections), and develop human resources. • Gender perspective critical.

    8. Allocation of labour as a macro issue • Labour is a critical factor of production & the functioning of labour markets matters for macroeconomic outcomes (Solow, Akerlof, Yellen, Keynes) • The allocation of labor in the economy affects overall performance. Concentration in high risk, low-productivity activities harms aggregate outcomes & development dynamics. • Gender segmentation has been shown to be highly costly, not only to women, but to the economy as a whole.

    9. Labour as a produced factor of production • Growth models/policies often do not pay adequate attention to how labour is produced. Fertility, unpaid care work, non-market aspects of human capital. • Some exceptions (e.g. Becker and Barro, 1989). However, non-market factors essential to make growth work. Altruism in the B&B model. Others have stressed non-market processes, gender roles, bargaining, a role for the state, etc. • Need to consider a broader allocation of labour. Market and non-market activities essential for growth. • Rethinking labour markets involves a rethinking of the allocation of ALL labor and how the development of human resources is coordinated.