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Sex and the economy

Sex and the economy
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First Published: Tue, Sep 22 2009. 09 29 PM IST
Updated: Tue, Sep 22 2009. 09 29 PM IST
Aright to food activist who I met in New Delhi last week made a very perceptive remark about the state of family dynamics in India.
We were discussing the relative merits and demerits of handing out cheap food to poor families versus handing them cash.
Several economists have seen the success of conditional cash transfer schemes in Latin American countries such as Brazil, and they believe that a similar system would work very well in India. In short, the government should bypass its expensive, inefficient and corrupt social security apparatus— such as the ration shops in the public distribution system—and give the poor cash to spend. There is a lot of meat in this line of thought.
This activist offered several reasons why giving subsidized food is a better option than doling out cash in the case of India, but one of these reasons was remarkably insightful. He said that much depends on the state of gender rights in a country. Women in Brazil have far more rights in a household than Indian women do.
And this unarguable but important fact has important ramifications on the design of social security initiatives such as the right to food.
In a typical Indian household, men control the cash while women control food. His point was that if the policy aim is to ensure that no Indian goes to bed hungry, then it is a far better idea to give food directly rather than hand over cash that the husband may spend on other things.
There is not adequate appreciation of the fact that gender rights and economic development are inextricably linked. The Economist in April 2006 had provocatively, but correctly, pointed out that women joining the labour force have contributed more to economic growth than the usually cited factors such as China, India and the Internet. Besides: “Women will…be better equipped for the new jobs of the 21st century, in which brains count a lot more than brawn.”
But the entry of more women into the labour force is a positive even in developing countries, where growth tends to be driven more by the growing use of capital and labour rather than better use of these resources through innovation. There is enough research that shows how economic growth picks up when more women enter the labour force. “…in developing countries where girls are less likely to go to school than boys, investing in education would deliver huge economic and social returns. Not only will educated women be more productive, but they will also bring up better educated and healthier children,” added The Economist in an editorial.
These issues came to mind as I read a new research paper by economist Raquel Fernandez of New York University, published by the National Bureau for Economic Research in September. Fernandez tries to “shed light on the relationship between women’s rights and development by focusing on a fundamental economic right: property rights”.
As wealth accumulates and families have fewer children, the incentives for males in a patriarchal system change. “At some critical level of fertility or capital, the disparity in the welfare of daughters versus sons implies that a father would be better off sacrificing the consumption benefits he obtains from being selfish with his wife in order to ensure that his sons-in-law are forced to be generous to his daughters,” writes Fernandez.
India has recognized property rights for daughters since 1956, at least for the Hindu community. Some states have since moved further to ensure that women automatically get property rights. Goa introduced a law whereby a woman automatically gets a share of her husband’s property when she marries, subject to certain conditions. Yet, in a poor country such as India where most people do not have too much property, such rights could have less of an impact on development than in many other countries.
Gender equality is a fundamental good. But there are also important economic benefits.
Getting more women out of the house into the workforce would help both economic development and empowerment. And there could be a positive feedback mechanism as well. Economist Gary Becker has shown in his pioneering work on the economics of the family how higher real wages raise the opportunity cost of staying at home and bearing children. Also, rising wages for skilled labour is an incentive for parents to invest more in a child’s education and thus have fewer children.
The broader point here is that India cannot hope to accelerate growth and meet key social security goals unless there is more focus on the role of women in our system. Higher investments in school education for girls and policies to lower fertility are two obvious policy responses. The first will help more women participate in the modern economy and the second will help them improve their economic position relative to the position of men.
Niranjan Rajadhyaksha is managing editor of Mint. Comments are welcome at cafeeconomics@livemint.com
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First Published: Tue, Sep 22 2009. 09 29 PM IST