Home > Uncategorized > Discussing the GDP production boundary in a serious way

Discussing the GDP production boundary in a serious way

A well-known criticism of national income is thr\e ‘Ïf you marry your maid you will diminish national income‘ mrmr. Sigh. We should forget about this silly male fantasy and give women their due by replacing it by what really happened. Domestic workers did not marry their single masters. They left them, as they had better paying things to do. Or the income of their family rose, which enabled them to get an education or to care for their own kids. Unprotected labor by Vanessa May is a good book about the work and life of domestic servants in new York, 1870-1940. The influence of this on how we have to understand GDP is important. So, what happened?

Once upon a time, every middle class family and many other families had a maid living in. As Allyson Grossman shows, around 1870, more than half of paid women were live in domestic servants. In 1940, this had shrunk to 20% tough while (in the USA) black women had replaced immigrant women and girls from west and northern Europe.  As these black women, who had often migrated from the south of the USA to the north, also had their own families to look after they did not want to live in, anymore. In 1960 the share of domestic servants in total female employment percentage had shrunk to a till sizeable 9%. After 1960 a combination of lower supply of servants, smaller families, household mechanisation (the washing machine, no-iron shirts, prepared meals from the supermarket, …) as well as a buoyant development of other options available to women led to a further dwindling to 5% in 1970 and about 2% in 1980. The live-in servant still exists in the USA: look here for a website where women) offer such services.

GDP has a clear production boundary: the monetary exchange economy. Which also covers domestic servants. Domestic servants largely disappeared, at least in the rich western world and in Europe to an even larger extent than in the USA. The ILO however estimates that today there are, at minimum, 67 million domestic servants worldwide. In this short blog, we have mentioned global migration, internal migration, a racial aspect, household technology, shifting demographics and differences between countries in a historical framework. In my not so humble opinion, it is more interesting to discuss the ‘production boundary’ and the shift between monetary exchange and reciprocal exchange in households against these variables than using the dumb example mentioned above. Economics can be a science, too.

  1. Helen Sakho
    July 22, 2018 at 3:02 am

    Maids, servants and slaves come in different forms and shapes and colours. They always did and they certainly do now, as visible or invisible as any fantasy wishes to imagine. And, yes, it has an enormous amount to do with migration and its extreme polarisation (In all its forms) in the last few decades and directly to do with excess wealth and abject poverty. In this general context, gendered stereotypes have also changed beyond recognition, and no need to look too attentively to see this. There is absolutely no way that anyone can currently accurately estimate the number of maids that exist, are sub-contracted to a sub-contractor who works for an ethical company, a state, a trafficker, a corporate boss, or a “self-made” businessman or a lawless state, and quantify the relationship between the contribution they make. A rough guesstimate would go far above any figure quoted by the most progressive or renowned institutions.
    At the very best, economics can be a social science, which like the rest of them has to acknowledge contradictions, variables, new phenomena in a society and not segment itself into pigeonholes. I hope that day arrives one day.

    • merijntknibbe
      July 22, 2018 at 10:56 am

      Dear Helen,

      my explicit aim with this blog sure is to let economists acknowledge the ‘contradictions, variables and new phenomena’! I’m a little more optimistic about measurement than you are, but agree that a rough estimate of quantities will do while the qualitative nature of this kind of work, as embedded in social and gendered and whatever relations, is the part of it which, at this moment, requires more precise measurement

  2. Prof Dr James Beckman, Germany
    July 22, 2018 at 7:46 am

    Another, far earlier issue, is the family as a productive unit. As I live in Germany I am surrounded by millons of family-run businesses, meaning over generations & at least one other family member in the firm besides the owner. We don’t really deal with this well, either, do we? For the German family Rothschild we go to 1744: https://www.britannica.com/topic/Rothschild-family

    • merijntknibbe
      July 22, 2018 at 10:57 am

      Dear James,


  3. July 22, 2018 at 4:09 pm

    Value and money flows between family members, domestic employees of families, and comparing that to family businesses. All excellent topics to model as graphs :)

  4. July 22, 2018 at 5:42 pm

    I would include the unpaid work of women in nuclear families that do the housework (maid), raise the children (nanny) and make the meals (cook) and all the other chores that have to be done. Because this is “unpaid” work, it is considered not productive and never achieves GDP status; but I understand that the fees that banks charge customers for services is included in the GDP. It’s still a man’s world!

  5. Grayce
    July 22, 2018 at 9:29 pm

    Math matters. If maids were once “20% of all women in paying jobs” and it (the percentage) “shrank,” you would need to know the base, too. That is, with the smaller percentages, was it that there were fewer actual domestic servants, or were there more (and more) women in all jobs, such that domestic (DS) divided by all women employed (AWE) times 100 equals percentage. Mark Twain knew all about statistics when he gave the definition of lies. The principle involved is: keeping the same top number (dividend) and grow the base (divisor) and you shrink the percentage number (quotient). Sorry to belabor, but economics and stats that deal with percentages (don’t even mention Productivity calculations that rely on being in the same timeframe) can be a bit of a shell game.

    • merijntknibbe
      July 22, 2018 at 10:53 pm

      The base sure inreased. Actual number of women working as a domestic servant in the USA reached a peak of 2,3 million in 1940 and was still 1.5 million in 1970, to decline to 1 million in 1979, according to the Grossman article mentioned in the text.

    • Prof Dr James Beckman, Germany
      July 23, 2018 at 8:36 am

      Good point, Grayce, as we often have employment figures from differing data-bases with differing definitions. Having used California as my work base for much of my life, I know that illegals powered most of the home domestic workforce for many decades. So not only did these mostly females not have social security or health care, they weren’t included in a work count. Others here have spoken of the domestic services provided by wives/girlfriends as well as kids. With so many home-based businesses today, I am sure that older relatives & friends fit into such modern “cottage industries” are unrecorded workers, as well. I love the effort involved in all of this, but it sure makes scientific discussions of work force a chancey activity, I think. If the work done is illegal in itself, there is yet another dimension.

  6. Helen Sakho
    July 23, 2018 at 3:11 am

    I have no particular quarrels with anyone really. Of course, more precision should lead to more clarity and better questions and I look forward to a whole new curriculum of basic and advanced Economics. Women’s labour of “love” defined as domestic division of labour has never been rewarded, neither has domestic violence and rape by their masters (legal or not) investigated properly even among female police officers. Pay inequalities globally are still “unexplainable”. A look at the rise of right-wing extremism in the West (call it what you want) is and remains centred on immigrant labour that is disproportionately exploited, punished, imprisoned, denied access to basic education and housing or to basic health and safety, assigned to an eternal and increasing reserve army of labour, subject to deportation at any time, and the rest of it. I have repeated argued, taught and written that migrants (old or new) do act as a die that runs through the veins of such societies (the equivalent exists in the East, do not worry) to highlight internal conflicts within the mainstream. Involuntary migration arising from torture, imprisonment, famine, war, poverty, slave-sex labour, which I keep emphasising relates more specifically to the last few decades. It is the mother of all dies! This was and remains the case around each cycle of bust and boom. Our labour is either used to train, heal, please, or, in some way serve ( please just double check for yourselves the number of highly committed immigrant university teachers who remain untenured and without a pension after decades of unparalleled service with outstanding references compared to the natives or to those whose faces and behaviour fitted better a while ago). Or, as more recent ones, we are assigned to hell on earth as already mentioned. The first serious starting point of any scientific is to consider what is new and what is not and why.

    • Rob Reno
      July 23, 2018 at 10:27 pm

      While I recognize women have bore the greater burden of child rearing throughout history, in modern times many men have become caregivers. Ironically, when the shoe is on the other foot there is often a double discounting.

  7. charlie
    July 23, 2018 at 8:51 pm

    failure to account for women’s work in the home remains a travesty only old white men could ignore. Someone needs to account for the growth of GDP as women entered the ‘paid’ labor market and McDonalds, fast food industry replaced unpaid unaccounted contribution to society as part of GDP … how much GDP has been inflated as women’s contribution started being a significant part ..
    how much was lost as PTA and other voluntary work declined?

  8. Helen Sakho
    August 1, 2018 at 12:08 am

    Someone should calculate the number of women who die from excessive bleeding, or related childbirth problems, ranging from forced marriages to backstreet abortions, or from giving birth as they escaped and now escape from genocides and displacements.
    Having said this, the only equality-inequality that remains now is between all exploited men and women. As will be the case for their children, for generations to come. The final victims are always the children. As teachers, we should treat our students like our children, unless we are “trapped” in some form of exploitation ourselves. Whether we are aware of it not, it will not matter in the end. The results will be exactly the same. We will be bringing up generations of social scientists for the next round of willy-nilly achievements and Noble price winners, condemning the vast majority to the same fate of their ancestors.

    • Prof Dr James Beckman, Germany
      August 1, 2018 at 6:22 pm

      Most marriages globally are forced in the sense that the partners are not the initiators or makers of the union. (Sorry, it is difficult for me to avoid “machen” (making) as it seems to appear in about every third sentence I hear in German.) Yet, life could be more tender if the adults around these kids were more supportive.

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