Have house prices pushed up female employment?
Women’s share of senior management has soared in East Asia, the Americas and Europe. But there’s still considerable variation, even among countries with similar wealth and culture. Germany’s management is still over 70% male, whereas the USA is far closer to gender parity. Why might this be?
Economist Claudia Goldin famously argued that contraceptives enabled women to further their education, while job-creating economic growth sustained rising labour demand. Taking a slightly different tack, demographer Steve Ruggles emphasises the fall in men’s relative earnings. Unlike their fathers, young men in 1970s America could not provide single-handedly as breadwinners. That’s absolutely true, but I think we need to pay more attention a major form of expenditure: housing.
I suggest that people’s desire to work is mediated by how much they want to spend. And this varies, both over time and between places.
‘The rising cost of living’ was the most commonly cited explanation of soaring female employment when I listened to men in Mexico, Cambodia, Zambia and Spain. They didn’t emphasise male earnings, but escalating costs.
House prices have ballooned, globally
Millions of people have moved to cities, where demand outpaces supply. In Latin America, the ratio of house prices to earnings has become enormous. In Sydney and Vancouver, house prices exceed annual incomes ten-fold. The ratio has risen especially steeply in Anglo-speaking countries, John Burn-Murdoch suggests this could reflect a stronger cultural preference for a solo home (over flats).
Households’ relative expenditure on housing also varies internationally. Canadian prices have sky-rocketed.
Households’ housing cost burden is far higher in the US than Germany and Austria. This holds even though US households typically comprise two full-time earners, whereas German and Austrian women are often part-time. Germans also tend to work fewer hours.
Germany’s housing market is more regulated. Half of German households are renters, and under rent controls. This caps higher spending. Americans, by contrast, can compete over better stock. Prices are also soaring in London, where construction cannot keep up.
I suggest that men and women’s labour market commitment is mediated not just by pay but also expenses. This helps explain why Germans work fewer hours in general, why German wives typically work part-time, and why German management remains over 70% male.
What about cultural preferences?
Culture definitely matters. In societies like Delhi (where men’s honour depends on female chastity), men may rather live with their parents than permit their wives to work.
Might culture also explain why German companies are still male dominated? Are they systematically more sexist than Americans? Are women more likely to be shunted out?
In Pew and World Values Survey opinion polls, Germans and Americans seem similarly egalitarian. Germans actually elect more women leaders. Their cabinet is now gender equal. Angela Merkel served 16 years as Chancellor, while America has never had a female head of state.
Now, it’s true that German women’s earnings fall far more after child birth. Germans are also more likely to say that mothers should remain at home with young children. But the attitudinal difference is not enormous. We cannot assume it is the prime mover. Mothers may be choosing to step back from the labour market because their husband’s salary covers housing.
Or maybe American women just love to work? Weber’s Protestant ethic? No. Only 28% of Americans married mothers said they wanted to work full-time. The vast majority would rather work part-time or not at all. This is consistent with qualitative research on maternal exhaustion. Working full time and taking care of the kids is seriously tough. Many bite the bullet only to make ends meet.
Implications for Gender Equality
I suggest that where house prices have massively outpaced male earnings, women are more likely to work full-time and thus more likely to make it to management.
If I’m right, this also has implications for how we see different political economies. Capitalist prosperity in the USA compels many women to work full time while regulated social democracy in Germany maintains the male breadwinner. Many Spanish feminists decry “capitalist patriarchy”. You can understand why. House prices have soared, care is expensive. But these escalating costs have also boosted men’s support of dual earners and enabled greater gender equality. That may be the trade-off.
House prices may also help explain why female employment is so high among Hindu Indian migrants. It’s not just that Western economies have more jobs, better public safety, and different cultural ideals. Male migrants do not have family homes, nor are their earnings sufficient to buy a new place.
Cities may even get locked in to these trends. Across the US, house prices and married women’s labour force participation are positively correlated. Dual earners may be pushing up house prices.
Acknowledgements: this Substack was inspired by a conversation with the great economic historian Joachim Voth.
A couple of points.
First, the US CPI does include the cost of housing, though it uses imputed rents, so rising prices show up with a lag. But over the long term, that lag should not matter. What's really going on is that housing markets across the country are so different that the average price increase doesn't look like much over the long term. But what's really going on are astronomical housing price increases in large coastal cities, moderate to large price increases in large Sun Belt cities, and price increases corresponding to population growth in most of the country, which includes declining real prices in a lot of the Rust Belt and small deindustrialized towns.
Still, the broader point stands.
About the other point -- where high housing prices encourage married mothers to work. I'm not disagreeing, but there is the possibility that causality goes in the other direction. Married mothers working meant higher household incomes and increased demand for larger, nicer houses. The other major phenomenon driving housing patterns and prices during this time period was desegregation and "white flight," where large numbers of people (originally mostly white people but now also a lot of ethnic minorities) moved from cities to suburbs in search of "better" schools for their children. This has only accelerated in recent years, where increases in house prices in local markets are highly correlated with local school test scores.
So to summarize: the alternative explanation is demand-driven, where higher family incomes drive demand for more expensive houses.
Great piece that gives another angle to thinking about so many topics - housing, dual income households, child investment and women in the work place. I really wish these types of pieces and discussions were taught or shown in intro to economics classes, because it shows just how insightful the field is and how much variety there is in it!
I had a question regarding another channel that might impact the decision of women to work (and I wasn't able to find anything quickly on a google scholar search) - does access to healthcare via the work place matter for women's decision? Mainly I'm thinking about the decision to have children, but I understand that if your partner has healthcare via a workplace, women would be eligible for maternal healthcare.
Another thing that popped to my mind while writing this: do college expenses matter? That is families choose to become a dual working household, because they may need to accumulate savings to pay for college for their children.