Longer Working Hours of Women - Essay Example

Labour Economics Increase in Female Human Capital and Labour Force Participation Led to Distribution of Housework within Household - Table of Contents I. Introduction …………………………………………………………….. 3 II. Factors that Contributes to the Longer Working Hours of Women ……. 4 a. Distribution of Income between Men and Women ……………. 4 b. Increasing Number of Single Mothers ………………………… 7 c. The Economic Performance of the Country …………………… 7 d. UK Tax Reform …………………………………………………. 8 III. Income-Leisure Choice Theory …………………………………………. 11 IV. Conclusion ………………………………………………………………. 14 References ……………………………………………………………………… 16 Introduction There are a lot of factors that contributes to inequality of wealth among individuals. Some people may have the benefit of being born into wealthy families. These people generally have the opportunity to have a greater ability to learn during their childhood years. Others may be born in a country with a favourable cultural and genetic attributes when it comes to acquiring knowledge. (Becker and Tomes, 1986) Most of the time, biological factors and culture are being transmitted from the parents to their children through DNA. Basically, when the parents are well educated, it is also expected that their children with have the equal opportunity for a good education. Aside from biological and cultural factors, industrialization has been pointed as the main cause of inequality which started between the agriculture and the industrial sectors. According to Williamson and Lindert (1980), the movements of the skilled and unskilled pay ratios clearly reflect the unequal distribution of wealth particularly between men and women. (Williamson and Lindert, 1980) Industrialization resulted to a lesser demand for human resources. This causes the increase in competition among the workers. The unequal resources such as the access to education between the rich and the less fortunate people resulted to a wider gap on the distribution of wealth between the two sectors of the society. This paper will discuss in details the effects of the inequality in the distribution of earnings, income, and wealth among men and women as a family in comparison to the case of single mothers as well as other factors such as the economic performance of the country and the UK tax reform. These factors could greatly affect the income-leisure time of women. On the other hand, the use of ‘Income-Leisure Choice Theory model’ could give us a better outlook on how working women or single mothers often end up working for longer hours resulting to a redistribution of housework within the household. The increase in number of working women would expectedly result to a trade-off between income and leisure choices. Factors that Contributes to the Longer Working Hours of Women Distribution of Income between Men and Women The constantly changing working environment has resulted in the changes of employment patterns among men and women over the past decades. According to OEDC – Employment Outlook, the number of women participation in the corporate world has constantly increasing; while the men continuously declining. Specifically, the gender wage gaps between men and women in terms of their median earnings are wide. (See Table I – Gender Gap in Median Earnings of Full-time Employees in 2004 below and Graph I – Gender Wage Gaps on page 5) Table I - Gender gap in median earnings of full-time employees, 2004 Countries Median Earnings Year New Zealand 5.9 2004 Belgium 9.3 2003 Poland 11 2002 Greece 11.5 2003 France 11.7 2002 Hungary 13.2 2000 Denmark 14.3 2004 Australia 14.4 2004 Sweden 14.9 2003 Spain 17.3 2002 OECD average 18.3   Czech Republic 18.6 2003 Portugal 18.9 2003 Ireland 19.7 2000 United Kingdom 20 2003 Finland 20.1 2003 United States 21.6 2003 Canada 22.6 2004 Switzerland 22.6 2003 Germany 24.1 2002 Japan 32.0 2003 Korea 39.8 2002 a) Ratio of mean earnings for Denmark and Greece. Source: OECD Employment and Labour Market Statistics. Since the earning gaps between men and women are quite big, women especially those who are single parents are forced to work longer hours than men. For example: Jack is earning £5,000 a month working 8 hours a day as a manager in a five-star hotel; while Cindy, earns only around £500 a week working for 8 hours on a part-time job as a waitress because she is taking care of her child as a single mother in the morning. For Cindy to be able to earn £5,000 a month, she will have to take a double job or work for longer hours so that she could have adequate finances in case her child gets sick, etc. In this case, Cindy will have to work for a total of 80 hours a month in order for her to earn the same amount Jack is earning. [(£500 / 8hours) = £62.50 / hour; £5,000 a month / £62.50 per hour = 80 hours a month] Based on OECD report (2002), the number of women working for more than 45 hours a week has been increasing over the past few years. (See Table II – Percent of Employed Men and Women Working More Than 45 hours per Week; and Graph II on page 6 ) Table II - Percent of Employed Persons Work more than 45 hours/week, 2002   Men Women Netherlands 2.4 0.4 Norway 6.7 1.0 Luxembourg 5.3 1.3 Austria 5.9 2.3 Switzerland 9.5 3.1 Germany 10.4 3.1 Canada 11.5 3.2 Belgium 9.3 4.2 Sweden 5.2 4.4 Finland 10.7 4.6 Hungary 11.7 4.9 France 11.7 5.5 Ireland 14.8 5.9 Slovak Republic 11.6 5.9 Czech Republic 17.3 6.1 Denmark 17.9 6.1 Spain 12.8 6.4 Portugal 16.5 7.3 United States 20.3 9.0 OECD average 21.7 10.3 Poland 24.5 12.1 United Kingdom 39.3 12.2 Italy 14.9 12.6 Australia 35.3 13.6 New Zealand 38.4 13.6 Japan 38.9 14.8 Iceland 60.1 15.8 Greece 24.5 16.1 Mexico 68.5 44.2 Turkey 72.5 58.2 Source: OECD Employment and Labour market statistics Increasing Number of Single Mothers According to a social trend survey, specifically in Northern Ireland in UK, single parent families are growing fast in number. (BBC, 2004) Normally, a married couple shares household expenses. The household income for the family is less burdensome since the financial requirements can easily be distributed between the couple. This way, women will still have ample time to play their role in doing housework and duties as a mother. Unlike in the case of single mothers, the only way she could increase the income for her children is through increasing the working time available. It means that a single mother usually ends up sacrificing her leisure time with her children as well as doing some household chores in exchange of the income she would earn while working. The unequal growth in the participation of men and women in the labour market increases the concerns that women would have to work longer hours to earn more because in the absence of a husband, a woman may not be earning enough to sustain the increasing personal financial needs. The Economic Performance of the Country In case the economy of a country is booming, demand for human resources (workforce) also increases. (See Chart I – A Good Economy on page 8) This allows women in general to have the option to take double jobs and longer hours at work. On the other hand, in case the country is experiencing economic recession, the demand for human resources decreases. The decrease in the demand for workers is also associated with mass layoffs and a decline in bargaining power of the workers to demand for higher salary or wage. (See Chart I – A Bad Economy on page 8) In case of a bad economy, the government could increase the government spending in order to create more job opportunities for the local citizens. This way, the public can earn more money which could be used to increase the public spending. Thus, boosting the economy of the country. UK Tax Reform Aiming to increase the living standards of the lowest-income households in UK, the UK government introduces the working families’ tax credit only to those that are employed. (Brewer, 2007) On the other hand, those families who belong to the top decile will be associated with an increase in the national insurance taxes while taking away the mortgage tax relief and married couple’s allowances. (See Graph III – Distributional Impact of Major Fiscal Reforms and Table III on page 9) Graph III - Distributional Impact of Major Fiscal Reforms - Announced since July 1997 by Decile -     11           9                 7                   5                       3                                         1                                                                                 -2                                                         Poorest Decile 2 Decile 3 Decile 4 Decile 5 Decile 6 Decile 7 Decile 8 Decile 9 Richest   Sources: Institute of Fiscal Studies (IFS), 2000 Table III - Changes in post-tax incomes within deciles       Percentage of households within a given decile whose income changes by: Total   –£10 or more –£9.99 to –£1 –£0.99 to £1 £1.01 to £10 Over £10 Poorest 2.90% 23.30% 16.00% 27.00% 30.80% 100.00% Decile 2 2.00% 17.30% 12.10% 32.10% 36.50% 100.00% Decile 3 2.90% 16.20% 9.60% 45.20% 26.20% 100.00% Decile 4 3.20% 18.10% 7.90% 52.30% 18.50% 100.00% Decile 5 4.40% 24.20% 10.60% 46.70% 14.20% 100.00% Decile 6 5.00% 23.30% 9.70% 51.50% 10.60% 100.00% Decile 7 8.70% 29.20% 10.10% 44.30% 7.70% 100.00% Decile 8 8.20% 34.60% 8.90% 42.90% 5.50% 100.00% Decile 9 12.30% 36.90% 8.50% 38.70% 3.60% 100.00% Richest 20.10% 49.30% 8.60% 20.40% 1.70% 100.00% Source: IFS, 2000           The specified tax rate UK is using is based on the level of income each family is earning, the type of family – whether the couple has kids, or is a single parent, or never been married, etc. The tax rate distribution according to ‘decile’ is very beneficial to the UK unemployed citizens especially to those single mothers. This concept of tax rate actually narrows down the gap on unequal distribution of wealth among the people residing in UK. It releases the tax burden on those who belongs to the lower income earning families. For example, Maggie is earning £4,000 a month working as a supervisor in a multinational company while Reena, a single mother, is earning only around £700 working as a hair dresser. Assuming that the government issues a fixed tax rate of 10% per month, Maggie and Reena will be earning £3,600 [£4,000 - (£4,000 x 10%)] and £630 [£700 - (£700 x 10%)] respectively. In this situation, Cindy will have a serious problem raising her child with such a limited income per month. Let us take a look given that the tax rate for each individual is bracketed depending on the amount of income each individual or family is earning in a month. For example, the tax rate for those individuals earning more than £3,000 a month is 10% while the tax rate for those earning £700 and less is only 2.5%. Considering the examples on earning income we have mentioned above, Maggie and Reena will be earning £3,600 [£4,000 - (£4,000 x 10%)] and £682.50 [£700 - (£700 x 2.5%)] respectively. The nominal value Maggie paid for tax is £400 while Reena paid only £17.50. It means that this type of tax method is more beneficial for those who belong to the lower income class. Also, this type of taxation scheme follows the free-market. It is not dictated by the government as to how much tax each individual should pay. It merely depends on the amount of salary each person earns in a given period of time. (See Figure 3 – Free Market on page 11) This chart represents anything in a free market. For instance, the price of a computer is dictated by the supply of computers or the cost of labour depends on the supply and demand for manpower. Whatever profit is earned from selling those computers or profit an employee earns from working will be the basis on how much tax each UK citizens are obliged to pay. These taxes also vary depending on the number of children a couple or single parents have. Income-Leisure Choice Theory The choices made my an individual regarding the time allocation between activities related to work and household (leisure) is one of the most important decisions one has to make. (Kuhn, 2000) It is rather difficult to allocate time between these two activities because of the fixed amount of time available each day. Deciding on how much work to perform highly depends on the factors such as the salary a person is expecting per hour, the amount of income taxes that is expected to be deducted from the salary, and the expected weekly or monthly expenses that could occur within each household. There is a wide leisure gap between the high-skilled and low-skilled workers. (Landsburg, 2007) Over time, the leisure gap is growing bigger than before. Back in 1960s when there is less competition in the market, the leisure time between people who belong to the same age bracket, sex and family size are almost the same. Socioeconomic status was never a factor which contributes to the gap on time for leisure and sources of income. Today, unemployment is the major cause of widening the gap between the income distribution and the available leisure time. Also, the increased standard of living is causing many people to work over time just to cover their daily expenses. For those who are working, they tend to spend more time at work than relaxing, doing household chores, spending time with kids, going to parities / bars, reading the newspaper, surfing the web, or even visiting friends. Demographic changes also affect the income-leisure of each individual. The more children married couple has, the more time they spend working in order to sustain their daily expenses. Educational attainment is also a factor. The more educated a person is, the higher the chances that he/she is going to get a job. Because of the competition in the market, those who are less educated are the ones who are left behind in terms of job searching. Income and leisure should always be balanced in order to have a healthy life since our happiness would depends partly on the salary we get from working and the time we spend with our loved ones, watching our favorite TV shows, or even doing our hobbies. For example, let us compare the difference between earning £5 and £10 per hour. (Friedman, 2007) Assuming that Tina is working for £5 per hour and Trixia for £10 per hour, if both are expected to work for 12 hours per week, how income would Tina and Trixia receive each week? Tina and Trixia should receive £60 [12 hours per week X £5 per hour] and £120 [12 hours per week / £10 per hour] each week respectively. The time outside work will then be used for leisure. (See Figure 4 – Income and Leisure below) This curve above shows that as wage rises, the number of hours spent on working decreases. This gives an individual more time spent on leisure. Each individual works according to the expected amount he / she will be getting in each job. Given the expected salary, as an employee, the person has the option to choose whether to spend more time at work or in leisure. In case of tight financial needs, an individual especially the single parents will be left with no choice but to sacrifice most of his/her time working than staying at home or go somewhere else to do his/her personal activities. Based on Figure 4, a person earning £120 per day working for only a little more than 4 hours may choose not to work most of the time because the person has already earned enough for his own consumption and expenses; whereas a person earning only £60 per day for 7 hours may choose to spend more time at work to earn extra money for his/her needs. The redistributive taxation such as the one that UK have since 1997 (taxation based on Decile) is one example which can balance the income-leisure time in each individual. To those belonging to the poorest of the poor or is earning minimal wage, paying tax based on decile will not hurt their pocket more than what fixed income taxes can do. Basically, when a person prefers to go for ‘leisure’ over ‘work’, the curve usually slopes vertically. For some people who would prefer working than spending time on leisure, the curve tends to slope horizontally. (See Figure 5 – Understanding Indifference Curves below) Conclusion The increase of women’s participation in the workforce resulted to a decrease in their leisure time spent on housework. It is expected that women’s housework within the household will definitely be distributed. For single parents, most of them would prefer to work for extra hours in order for them to be able to compensate with the financial needs of the child / children. Basically, when a person spends more time at work, his / her time spent on personal activities will be cut short. There are quite a lot of factors that could affect an individual’s priorities between the time spent at work and on leisure. Among the common factor is the amount of salary each person is expecting to receive on a pay day. Based on the expected salary per hour, a person could decide on whether to spend more time working or not. Other factors such as the amount of income taxes the government would deduct from an individual. UK government has come up with an income tax structure that is friendly to low-income earners. This is one factor which could help each person have more time to spend on leisure than at work. Another major factor is the economic performance of the country as a whole. People who prefer to spend time working can have a better chance to work longer time because of the sudden increase in demand for goods would eventually result to the increase in the demand for his / her services. One way to temporarily increase the demand for goods and services is to increase the government spending or public consumption. In my opinion, time spent on work and leisure should always be balanced. Too much time spent on work would result to a diminishing quality time spent on kids, friends, and other personal activities. This will result to unhealthy living in long-run. Furthermore, chances that an individual getting ‘burn-out’ from work is high. On the other hand, spending too much time on leisure alone is also not good because the person would possibly have financial problems related to unpaid bills and debts. *** End *** References: 1 BBC News (2004) ‘Single Parent Families Increasing’ July 8, 2004 Retrieved: April 23, 2007 < http://news.bbc.co.uk/ > 2 Becker, G. and Tomes, N. (1986) ‘Human Capital and the Rise and Fall of Families’ Journal of Labor Economics, 1986, vol. 4, no. 3, pt. 2. The University of Chicago 3 Brewer, M. (2007) ‘Supporting Couples with Children through the Tax System’ IFS 2007. pp. 216 – 239 Retrieved: April 23, 2007 < http://www.ifs.org.uk/ > 4 Friedman, D. ‘Chapter 5: Production’ Retrieved: April 23, 2007 < http://www.daviddfriedman.com/ > 5 Kuhn, P. (2000) ‘Income-Leisure Choice Theory’ Economics 150 Lecture Notes: Peter Kuhn, Spring 2000 Retrieved: April 23, 2007 < http://www.econ.ucsb.edu/ > 6 Landsburg, S. (2007) ‘The Theory of the Leisure Class – An Economic Mystery: Why Do the Poor seem to have More Free Time than the Rich?’ Posted: March 9, 2007 on slate Retrieved: April 23, 2007 < http://www.slate.com/ > 7 Williamson, J. and Lindert, P. (1980) ‘American Inequality: A Macroeconomic History’ New York: Academic Press. In Rosenbloom and Stutes (2005) ‘Reexamining the Distribution of Wealth in 1870’ September 2005 Retrieved: April 22, 2007 < http://people.ku.edu/ > Read More