‘The Economy’s Other Half’ (Heintz)- a review
Date Posted: Wednesday 24th June 2020
A book review of:
The Economy’s Other Half: How taking gender seriously transforms macroeconomics, James Heintz
Publisher: Agenda Publishing, 2019
by Sophie, WBG ECN member
At its most fundamental, ‘The Economy’s Other Half’ by James Heintz exposes macroeconomics deeply selective view of the economy in which women’s contributions are under-represented. It explains how and why we should foreground women’s economic experience and make macroeconomics more reflective of reality, by disaggregating the effects of policies on women, changing models of economic analysis and understanding the economic role of children.
This book excellently complements the work of the Women’s Budget Group by explaining the theory and tools for gender-responsive budgeting. It is particularly timely given the significant macroeconomic effects of Brexit and the Covid-19 pandemic. As politicians make significant interventions in the economy their decisions should be informed by understanding the gendered effects so that all groups benefit from the recovery.
Heintz begins the deconstruction of macroeconomics by demonstrating that although it may be considered gender blind it is not gender neutral. Policy evaluation and theory look at the economy as a whole. However, the policy impact for different groups is highly unequal because policies interact with pre-existing structures in society. Gendered employment patterns are a good example. Women predominate in public sector jobs, such as teaching and nursing, so fiscal policies like austerity, which reduce government spending and limit public sector pay disproportionately constrain women’s wages. As men are more likely to work in the private sector their wages are less affected by changes in government spending.
This disaggregated effect is clear within the private sector too. If a country’s export industry employs lots of women for example, in clothes manufacturing, then a monetary policy aimed at reducing the exchange rate should keep the costs of exports low. This would make them more competitively priced internationally and increasing demand for clothing from that country. This could then improve women’s employment rates.
Heintz even shows that the regulation of financial markets has a gendered impact. Women tend to be more vulnerable to changes in their economic circumstances as they often earn lower wages and have less in savings. This vulnerability is even greater for single parents who are not able to spread risks across two incomes, leaving them more exposed to economic shocks. If a country’s financial markets are less regulated and more volatile, this system will create the greatest risks for women.
This book feels particularly relevant during the current Covid-19 pandemic, as vulnerable groups are more exposed to compounding economic effects. Certain industries which have been hardest hit by the crisis, like hospitality and retail, employ high numbers of women. Decisions on redundancies will then play out on a background of existing discrimination in the workplace against women and minorities. Single parent families will feel be less able to deal with a job loss than dual income families.
We have also seen government solutions to the impact of coronavirus set up on a male ‘default’. Take the Coronavirus Job Retention Scheme which did not initially allow workers to be furloughed if they were unable to work because they were providing childcare. Even after arrangements for childcare were added, the scheme did not provide an option for part-time furlough. This design flaw meant that dual income families couldn’t share their furlough and women in heterosexual couples were more likely to stop working as they often provide the majority of childcare and tend to earn less than their partners. The effect of the scheme is to reduce women’s paid work to a greater extent than men’s.
In order to change the structures of economic decision making, Heintz proposes a new model of GDP, to account for unpaid work. His proposal corrects an enormously powerful structure that we use to monitor the health of our economy which often fails to recognise and marginalises women’s economic contributions. He expands GDP calculations to add labour, consumption, services and savings that are not bought and sold but provided outside of the market. This widens the definition of investment to include those made by governments and households in human beings. The significance is to propose a macroeconomics that would value labour within the household, the majority of which is performed by women, as well as valuing the role of government and human development.
Finally, Heintz examines the role of children in macroeconomics and argues that they should be given greater prominence as the future workforce. Heintz shows that women’s caring responsibilities provide a service to society that is completely unrecognised within economic models and significantly undervalued in society as a whole. Traditional economic theory struggles to explain why people would have children as they represent a costly and unreliable investment which there are no guarantees will repay you in old age.
Society as a whole will benefit from children when they enter the workforce, however the majority of investment will come from those who raise them. To get round this, macroeconomics assumes the workforce exists and doesn’t trouble itself too much with how they got there. This undervalues women’s contributions to the economy and ignores the patriarchal institutions within the household that mean that the costs of raising children disproportionately fall on women.
Macroeconomics also oversimplifies how a workforce gains the skills they need through education and human development. It ignores the role that unpaid care-work plays in early childhood development and supporting formal education, further side-lining work often carried out by women. As education contributes to a skilled workforce and a higher capacity to produce, Heintz argues that government spending and household time spent on education should be classified as investments. This may seem like common sense to non-economists but this change to economic modelling would shake up macroeconomic tenets and encourage governments to see investments in childcare and education as comparable to infrastructure projects.
This book covers a lot in only 100 pages, but it left this reader with many questions. Most importantly how this approach can expand to address intersecting inequalities or recognise the significant role of migration in the labour force. It is also unclear how this approach fits with other revisionist movements such as redirecting economics from an obsession with growth. That said, the book does what it set out to do, providing a short and highly readable introduction to gendering macroeconomics. It gives a clear summary of the issues and a strong framework for improvement, laying the foundations for further research.