Academic journal article
By Braunstein, Elissa
Journal of Economic Issues , Vol. 42, No. 4
The question of why hierarchies evolve and persist is an old one in economics. Neoclassical treatments in what came to be known as the "new institutional economics" explain the evolution of hierarchy in the firm (Coase 1937) and the family (Becker 1991) in terms of their contributions to economic efficiency. Just as organizing production within a firm offers economic advantages over individual transactions in a spot market, so does the sexual division of labor contribute to increased efficiency in family production. Hierarchical institutions are explained primarily as solutions to coordination problems.
Challenges to this neoclassical "efficient institutions" paradigm have come from the neoclassical growth literature. That (for the most part) the industrialized world shares institutions such as democracy, political stability, relative income equity and the rule of law led some growth theorists to argue that certain equity-enhancing social institutions are preconditions for growth. These "neoclassical institutionalists" maintain that inefficient institutions can and do persist, much to the economic detriment of societies that harbor them. (1) What makes these approaches neoclassical is the presumption that growth-inhibiting institutions are largely the result of market imperfections, or, more vaguely, failures to respond to changing economic incentives.
Despite the centrality of social inequity in these approaches, there is no sense in which economic actors exercise power or collective action to create and maintain social norms and rules that are personally advantageous but socially costly. Perhaps it is the subliminal shadow of Adam Smith's invisible hand, but there is a persistent presumption that activities motivated by self-regard result in the greatest social good. This despite the work of several eminent neoclassical economists on rent-seeking, which posits that efforts to claim unearned revenues (albeit largely in the context of government interference in markets) can pose significant costs for growth (cf. Krueger 1974; Bhagwati 1982).
The question of the relationship between gender equity and economic growth is an instructive context for understanding the structure and implications of these contradictions. Even though gender practices are inherently about the exercise of power, that they have become a feature of the neoclassical growth and development literature alights on obvious tensions in the neoclassical institutionalist paradigm. By incorporating insights from both the rent-seeking and feminist economics literatures, we will present an alternative explanation of why gender hierarchies persist despite their obvious economic costs.
We begin with a review of gender in neoclassical growth theory, moving from traditional theories of factor accumulation to the new growth theory literature, which contends that institutions like gender matter for growth. Then we turn to a discussion of rent-seeking and offer a framework for understanding choice that admits the exercise of power and collective action. The primary context of this discussion is development and the processes of industrialization in the late twentieth century, as that is the focus of much of the growth literature.
Gender and Neoclassical Growth Theory
Open any textbook on economic growth and you are immediately ushered into the standard core of neoclassical growth models, Robert Solow's model of long-run growth (Solow 1956). As the basis of modern neoclassical growth models, Solow's is still a pretty good representation of how most economists think about economic growth, although human capital has since been added to the original model, which only included physical capital and labor supply. In the Solow model, income levels and growth are outcomes of two factors: (1) factor endowments and their accumulation, including capital (physical and human) and labor; and (2) productivity. …