Chapter 1Chapter 1An IntroductionAn IntroductionChapter 1Chapter 1An IntroductionAn Introduction

• Different economic outcomes

• Using economics to explain differences

• Different economic outcomes

• Using economics to explain differences

Men vs. WomenMen vs. WomenMen vs. WomenMen vs. Women

• differences in work history• labor force participation

• differences in earnings• gender wage gap

• differences in occupations• occupational segregation

• differences in work history• labor force participation

• differences in earnings• gender wage gap

• differences in occupations• occupational segregation

• differences in education• years of schooling• type of skills

• differences in the household• household role• impact of marriage• impact of divorce• working & power in the household

• differences in education• years of schooling• type of skills

• differences in the household• household role• impact of marriage• impact of divorce• working & power in the household

Changes for Women, 1960-2000Changes for Women, 1960-2000Changes for Women, 1960-2000Changes for Women, 1960-2000

0

20

40

60

80

100

120

140

% wom enever

m arried, 20-24

% Singlem otherfam lies

births per1000

wom en, 15-44

% births tounm arried

wom en

% m arriedwom enworking

ratio ofwom ens

earnings tom ens

earnings

% B.A.degreesgoing towom en

1960

2000

Changes for Men, 1960-2000Changes for Men, 1960-2000Changes for Men, 1960-2000Changes for Men, 1960-2000

0

20

40

60

80

100

120

140

% m en everm arried, 20-

24

% Singlefather

fam lies

% m arriedm en

working

1960

2000

in this coursein this coursein this coursein this course

• we examine data that documents these differences and these changes

• how does economic theory explain this?

• how do policies explain and affect this?

• we examine data that documents these differences and these changes

• how does economic theory explain this?

• how do policies explain and affect this?

Policies do affect men and women Policies do affect men and women differentlydifferentlyPolicies do affect men and women Policies do affect men and women differentlydifferently

• welfare reform

• no fault divorce

• child care & family leave

• Social Security

• income tax code

• welfare reform

• no fault divorce

• child care & family leave

• Social Security

• income tax code

Why focus on women?Why focus on women?Why focus on women?Why focus on women?

• largest changes over time

• traditional models not always geared towards women

• more variation among women

• largest changes over time

• traditional models not always geared towards women

• more variation among women

Using economicsUsing economicsUsing economicsUsing economics

• Microeconomics studies choices• individuals• households• firms• government

• Microeconomics studies choices• individuals• households• firms• government

Why choose?Why choose?Why choose?Why choose?

• scarcity:• resources are limited, wants are

unlimited

• choices are necessary because resources are scarce

• scarcity:• resources are limited, wants are

unlimited

• choices are necessary because resources are scarce

• choose one alternative, give up another• lose out on benefits of next best

alternative

(opportunity cost)

• choose one alternative, give up another• lose out on benefits of next best

alternative

(opportunity cost)

exampleexampleexampleexample

• NYS budget• limited amount of raise-able

revenue• many choices

-- education, prisons, health care...

• NYS budget• limited amount of raise-able

revenue• many choices

-- education, prisons, health care...

• If we spend $200 million for capital improvements on SUNY campuses:• lose out on next best use of $200

million• next best use?

• If we spend $200 million for capital improvements on SUNY campuses:• lose out on next best use of $200

million• next best use?

example relating to gender example relating to gender economicseconomicsexample relating to gender example relating to gender economicseconomics

• time is the ultimate scarce resource

• dividing time between • paid work• childcare• chores/errands• leisure

• time is the ultimate scarce resource

• dividing time between • paid work• childcare• chores/errands• leisure

• men and women make different choices here

• but any choice on use of time has an opportunity cost• if work overtime…

lose out on time w/ kids• if stay home w/ kids….

lose out on potential wages/benefits

• men and women make different choices here

• but any choice on use of time has an opportunity cost• if work overtime…

lose out on time w/ kids• if stay home w/ kids….

lose out on potential wages/benefits

• scarcity means choices, and choices mean costs

• scarcity means choices, and choices mean costs

How to choose?How to choose?How to choose?How to choose?

• we assume that people are rational:• choose to maximize well-being

• rational choices• use all available information • weigh benefits and costs of options over

time• are consistent• show foresight

• we assume that people are rational:• choose to maximize well-being

• rational choices• use all available information • weigh benefits and costs of options over

time• are consistent• show foresight

example: deciding to go to collegeexample: deciding to go to collegeexample: deciding to go to collegeexample: deciding to go to college

• rational decision

• compare costs:

tuition, fees, books, value of time

• to the benefits:

fun, value of learning, higher future income, higher life satisfaction

• costs are immediate, benefits are long term

• rational decision

• compare costs:

tuition, fees, books, value of time

• to the benefits:

fun, value of learning, higher future income, higher life satisfaction

• costs are immediate, benefits are long term

Statements about outcomesStatements about outcomesStatements about outcomesStatements about outcomes

• positive vs. normative statements

• positive statements• statements of fact• verified as true or false• “Students who attend class earn

higher grades on average”

• positive vs. normative statements

• positive statements• statements of fact• verified as true or false• “Students who attend class earn

higher grades on average”

• normative statements• value judgements• not testable• “Students should attend class.”

• normative statements• value judgements• not testable• “Students should attend class.”

examplesexamplesexamplesexamples

• “Over 60% of women with children under 6 work” • positive

• “Women should get paid maternity leave”• normative

• “Over 60% of women with children under 6 work” • positive

• “Women should get paid maternity leave”• normative

more examplesmore examplesmore examplesmore examples

• using economic theory to explain gender earnings gap• positive

• arguing for laws or policy to eliminate gap• normative

• using economic theory to explain gender earnings gap• positive

• arguing for laws or policy to eliminate gap• normative

Is an outcome good or bad?Is an outcome good or bad?Is an outcome good or bad?Is an outcome good or bad?

• depends on criteria for judging

• Efficient outcome• agents allowed to max well-being?• does it use scarce resources to

produce output that society values the most?

• depends on criteria for judging

• Efficient outcome• agents allowed to max well-being?• does it use scarce resources to

produce output that society values the most?

• efficient outcome may not be• equitable or “fair”• moral

• judging an outcome as good or bad depends on criteria

• efficient outcome may not be• equitable or “fair”• moral

• judging an outcome as good or bad depends on criteria

criticisms of economicscriticisms of economicscriticisms of economicscriticisms of economics

• is behavior rational?

• is efficiency the best criteria for judging an outcome?

• do men and women differ in decision making, or in how they judge outcomes?

• is behavior rational?

• is efficiency the best criteria for judging an outcome?

• do men and women differ in decision making, or in how they judge outcomes?