UK Policy Briefings
A feminist approach to macroeconomics
Date Posted: Wednesday 2nd August 2023
Briefing from the Women’s Budget Group
No type of economic growth could happen without unpaid care and domestic work. Yet this work mostly continues to be ignored in mainstream economic analysis and policies. As the shock absorbers of poverty, women are particularly exposed to the current cost-of-living crisis, now more than ever, we need a feminist approach to macroeconomics.
What is macroeconomic policy?
Macroeconomic policy is the use of monetary and fiscal policy to achieve economy-wide objectives. Monetary policy is typically conducted by central banks and comprises decisions about interest rates, financial regulation and inflation targeting. Fiscal policy is determined by the government and covers public expenditure, taxation and borrowing.
However, by only focusing on paid activities, mainstream economic policy fails to consider unpaid care and domestic work even though it is fundamental for human life and the economy. Women and girls are the most affected by this lack of acknowledgement of unpaid care and domestic work because they are the ones who typically provide it. Uneven access to education, job segregation, gendered income disparities, and health issues are all caused by undervaluing and lack of recognition of care labour. The effects are also felt at the collective – macroeconomic – level, with increased costs for society in the long term. The fact that women might be prevented from increasing their participation in the labour market leads to a reduced workforce, lower employment and economic activity, a smaller tax base and skills shortages.
We believe that the ultimate goal of economic policy should be to improve the well-being of people by creating a green and caring economy framework, securing access to food, shelter, education, health and social care for everyone. At the heart of this lies social infrastructure, comprising health, education and care services, workers in this sector and facilities where the services are provided. Investments in social infrastructure have long-term positive effects, such as increased productivity, higher pay and tax revenues, lower social security spending, and reduced pressure on public services.
Government spending and investment decisions must be guided by long-term strategies based on responsibly improving well-being and equality, not self-imposed fiscal rules that are not only arbitrary but very volatile and more often than not, misguided. How to pay for public investments, how much and how to tax, and when and for what the government should borrow are all decisions that should be made in light of their impact on equality and well-being. A comprehensive economic framework that includes unpaid care and domestic work alongside market activities would lead to better policies and outcomes for everyone, reducing the pressure on public services and promoting gender equality and well-being in a sustainable way.