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Oxford Economic Papers Advance Access originally published online on October 12, 2007
Oxford Economic Papers 2008 60(1):42-56; doi:10.1093/oep/gpm039
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© Oxford University Press 2007 All rights reserved

Male wages and female welfare: private markets, public goods, and intrahousehold inequality

Suman Ghosh* and Ravi Kanbur{dagger}

*Department of Economics, Florida Atlantic University, 777 Glades Road, Boca Raton, FL 33496, USA; e-mail: sghosh{at}fau.edu
{dagger}Cornell University

JEL classifications:: D63, O12, Q23


  Abstract

We show how an apparently welfare improving phenomenon like an increase in the wage of the male member of a family can result in a seemingly paradoxical result where the entire family is worse off. There is male and female specialization in activities such that the female member is involved in a community level public good. A rise in the male wage leads to adjustment of household time allocation with the male working more in the market and less on household activities. In turn, the female works more on household activities and less on the community public good, failing to internalize the negative externality imposed on other members of the community. Under quite general conditions the implied negative effect can more than offset the positive effect of the male wage raise, and the entire family is worse off. The theoretical results are consistent with empirical findings in the literature.


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