Question

You are going to model households consisting of two adults—a man and a woman—and some kids. (While families are increasingly diverse, we are just going to focus on these households.)

The adults split their time however they like between home production and the formal labour market (i.e., working for pay). Let’s assume that households care only about efficiency. (This is a really bad assumption as it means we are ignoring a lot of really important factors like the role of gender norms. We make the assumption anyway for this test.)

Many places have restrictions on all sorts of gatherings. As a result, whether we are talking about educating children or feeding families, we are seeing an increase in home production. We are also seeing a large exodus of women from the formal labour market (either leaving a forpay jobs or not seeking another for-pay job after the loss of a for-pay job).

If, in fact this exodus is the efficiency-seeking response of households, what does this say about productivity, opportunity costs and PPFs for men and women in these households?

Answer 1

In the given case, it talks about the modelling of a household which is in general an efficiency based model. It also talks about the exodus of women from fomal work for pay jobs to more home production oriented situations. This exodus is likely to have an impact on the productivity and opportunity cost of the household with gender preferences.

As the women are more oriented towards shifting their mode of action, the opportunity cost would depend on how well they manage the home priductivity and how well efficient the nature of work done will be. In fact the opportunity cost of men would also likely increase as the women are in to the household production sector. The productivity of both are likely to increase slightly as the home oriened production methods would give them more time and opportunity to fine tune the skills and hence the productivity of the women would improve. The productivity factor for men also would slightly improve as there is more time to spend on such sectors which is demanded.

Hence, we can see that the overall productivity and the opportunity cost for the family would improve in such cases.