A significant amount of time is used to provide the day-to-day services demanded by households.

Putting a "price tag" on such household production would help with alleviating gender inequality — something many have explored in depth. But are there other benefits?

In this excerpt, Albert Winsemius Chair Professor of Economics at the Nanyang Technological University (NTU) Euston Quah and Tan Jun Rui, a researcher in the Economic Growth Centre at NTU, explore the practical benefits of valuing household production in law and public policy within the Singapore context. 

They also propose a novel alternative to value household production that addresses the shortcomings of other methods.

Their research appears in a new book, Why Not? Thinking About Singapore’s Tomorrow. The book's diverse contributors tackle topics like gender inequality, inclusivity, our ageing population, and their hopes for Singapore society in the years ahead.

Published by World Scientific with a foreword by former President Halimah Yacob, Why Not? can be purchased here, at Kinokuniya's bookstores, and at bookstore-café Book Bar.

By Euston Quah and Tan Jun Rui

Home labour is often taken for granted due to its unpaid (or lowly paid) and loosely monitored nature in the absence of a formal work environment.

However, the amount and value of time used to provide the day-to-day services of cooking, cleaning, shopping, child-rearing and the myriad other chores that are demanded by households is clearly not insignificant.

It represents a very substantial portion of the total productive time available to members of a household and to a society.

Thus, an accounting of its worth commensurate with wages earned from other employment is an issue of increasing practical importance.

How can valuing household production alleviate gender inequality

In 2020, the Singapore Government declared that gender equality should be a fundamental value.

Balancing family responsibilities and flexible work arrangements are among the key aspects that warrant attention, which allude to the often-overlooked importance of household production.

Singaporean females generally earn lower market wages than males — a 26 per cent difference in average mean monthly earnings in 2021, according to the Singapore Yearbook of Manpower Statistics 2022.

Women’s home productivity as measured strictly by the services or output that can be produced at home per unit time is commonly perceived as generally higher than that of men.

Therefore, women tend to specialise in housework and men in market work to their increased common benefit and cost minimisation.

Both partners are contributors to a household even though the act of one appears in cash flows and the other, in non-pecuniary household production, does not.

This division of labour is said to enable the household to maximise their total real income with the husband and wife specialising in complementary activities.

However, such an arrangement may be detrimental to the wife, for the following reasons.

Firstly, the opportunity costs of giving up one’s career and being a homemaker have been increasing over the years.

Being more qualified with an improvement in female literacy rates and amount of education attained over the years has seen more women being employed and actively seeking market work in Singapore.

Based on the proportion of employed residents by gender, it appears that although Singaporean females spend less time in the market compared to men, this divergence has narrowed over time.

For Singaporean females, as per the findings of the collaborative study by Ipsos and United Women Singapore in 2021, household production comes with greater perceived trade-offs to their career opportunities and quality of life as compared to men.

Secondly, while household responsibilities are typically shared between both spouses in a marriage, women are more likely to take on cleaning, cooking, and caregiver roles that are more demanding in time commitment with less flexibility in scheduling.

It may not be the case that women are inherently better at homemaking than men, but rather it may be the product of the age-long tradition of housewives’ homemaking skills being imparted from their own mothers.

However, the pressure of conforming to societal expectations means that there is much inertia in the shifting of such household responsibilities from housewives to husbands that are traditionally associated with the female gender.

According to the Ministry of Manpower’s (MOM) findings in 2021, most females (23.9 per cent) outside the labour force did not work because of housework responsibilities, while 14.3 per cent of them prioritised care for their family members and relatives over work.

This is a stark contrast to males’ reasons for not working, whereby only about 3.7 per cent did not work because of housework and caregiving reasons combined.

Knowing the value of household work helps household members come to optimal decisions on the allocation of time between work in the market and work at home.

Once members of a family understand the economic value of their contribution to housework, this value can be used to decide whether these contributions are comparable, less than or exceed wages that they could have earned or are earning in the market.

This provides a more meaningful estimate of how much women and men are willing to trade off market work and leisure time for time spent on household production activities.

Home labour is work, and the home is essentially considered a workplace. One may also argue that just like wage labour, housework is also generally performed out of love, duty and responsibility for the family’s well-being.

Therefore, knowing the value of household production may help to reduce gender discrimination and stereotypes to promote a more equal allocation of home labour between both spouses.

For example, the husband knowing that he contributes less to the household than his wife may feel more inclined to take on some of the home labour burden for a more equitable overall contribution if the cost of attempting to earn higher market wages is too high.

In the long run, such knowledge will hopefully facilitate acceptance of a family structure whereby men contribute more to non-market household labour and women to market work as a new gender norm rather than a deviation from the norm.

Legal uses

Another practical benefit lies in deriving the value of housework in legal cases involving compensation for accident victims whose family would suffer from the loss of household services normally provided by the injured victim. Such a loss is equivalent to losing part of a family’s real income.

Understanding the value of household work would help victims be compensated adequately without making the family worse off.

Singapore’s highest court considers the value of household production in a marriage when determining the division of matrimonial assets.

However, because much of what goes on within households is unrecorded, such indirect and intangible contributions are likely to be estimated based on mostly self-reported qualitative claims and crudely quantified in the derivation of a "scoring ratio" between both spouses.

By assigning a wage to home production that can be justifiably negotiated just like paid labour, this would empower women by effectively enforcing a less arbitrary marital contract between homemakers and their spouses.

Ways to value household production

One commonly used method to value household production is to estimate the foregone wages the homemaker spouse could have earned had he or she worked in the labour market instead of spending time at home. This is known as the opportunity cost method.

But this leads to questionable issues of housework value being higher for a housewife who is a qualified medical doctor, than for another who is a secretary.

Another method is to consider how much it would cost to hire a replacement worker, such as a domestic maid, to provide similar household services.

This method has two variants: one is a generalised replacement worker, and the other, cost incurred by a team of specialised replacement workers.

The value derived from the former is deemed to be inadequate because there are clearly many household services which a replacement worker would not be able to provide, such as tutoring small children and home budgeting and planning.

Using the second variant involves estimating the cost of hiring a tutor, driver, cook, cleaner and so on. But this is arguably an overestimation since a housewife is essentially a general worker, and not a specialist one.

A novel method that I first proposed in 1993 is to marry the two variants of the replacement cost, such that the major component of housework is replaced by hiring a maid, while the additional work done by the housewife and not by the maid is separately estimated.

The latter would include replacement cost by hiring a kindergarten teacher as tutor and the wages earned by a manager of a small firm comprising four to six workers since running a household can be comparable to running a small firm.

The contingent evaluation method has been used, with growing success, to value other non-market goods and seems an appropriate approach to value household production as well.

For example, the method could involve posing alternative contingencies to households in terms of whether they would rather pay specific amounts to reduce the time given over to household tasks or to keep the money and do the work themselves.

The theoretical presumption is that one would not expect households to be willing to pay more than their own marginal opportunity cost of household production nor more than what they expect to gain from having additional hours to home production.

At most, it might be expected that households are willing to pay an amount equal to their own cost of production or up to their marginal benefit from having the additional hours.

The difference between the mean values of the households’ total willingness to pay for household production and their total opportunity cost would give a measure of the amount of welfare enjoyed by households from having household production.

Bottom line

The value of household production should carry more weight. This is because it is no less important than the value of paid work and should be appropriately accounted for in the economic output of a nation.

Estimates of the value of household production should be compiled periodically and weighed against the economic growth statistics provided by national income accounts.

Such estimates should also be adjusted in the event of exogenous shocks which distort the value of time. In this way, society may know to what extent GDP growth can be attributable to increased labour force participation of women, or for that matter homemakers; and policies can be designed to influence this labour force participation rate.

Attention should not only be paid to our caregiving needs but also to the needs of caregivers, given the many compromises that they must make to paid work and leisure that have competing usage for time.

It is important that society recognises these trade-offs and reduces the psychological costs of women who feel that they are confined to the role of household production out of necessity or that they are more responsible for it than men.

Accounting for the value of household production using cost and benefit methodologies, while imperfect, will still be useful to facilitate an economic and legal recognition of the value of household production.

This will help the government design policies such as paternal leave, flexible working arrangements and social security benefits for both genders more prudently and fairly.

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