Increasing a person\’s wage can cause a significant drop in the amount of time they spend helping their parents with household chores, errands and transport.
For every ten per cent rise in their salary women will spend 36 per cent less time providing care and men will reduce their input by 18 per cent.
It\’s not an unusual result: we\’d expect things to work this way. There\’s a value to looking after the parentals. There\’s a value to leisure. There\’s a value to income derived from work. How much any one person does of any of the things will depend upon the relative values of each of them. Increase the value from one of them and we\’d expect people to do more of that and less of the others.
Note that \”value\” here is not monetary value but utility, that grab bag of all of the various different motivations and pleasures that make up the pleasure centres of the person.
One nice line in the paper to draw to your attention:
Central to the analysis of this interaction is the concept of the wage elasticity. The labor
supply literature suggests a positive wage elasticity of labor supply (smaller for males, larger
Yes, this shows that Ritchie was absolutely wrong in his TUC submission to The Treasury. To make his numbers add up about the desirable higher tax rate he made the opposite assumption (in direct violation of everything we know about male and female wage elasticity), that female wage elasticity was negative and not only that, but more largely so than male.
Isn\’t the TUC lucky to be so well advised?