The Effects of Policies of Different Welfare Regimes on Intra-Household Inequalities Susan Himmelweit Jerome De Henau Cristina Santos Zeenat Soobedar Open University, UK

Intra-household inequalities Interested in the distribution of resources within households Want to know which policy relevant factors might affect this: –directly –through influencing other factors that may affect the distribution of resources within households, in particular: how men and women spend their time (employment and housework) Compare different policy regimes for both direct and indirect effects on the distribution of resources within households: –UK vs. Germany (different welfare state types) –East vs. West Germany (same welfare state different practices and history)

Method Examine the distribution of resources within households by examining how men’s and women's assessment of their common household income differs Do this by looking at individual answers to question; “How satisfied are you with your household’s income” asked annually of all adults in a household: answers on a scale 1-10 –We will look only households with a couple of working-age whose children if any do not have any significant income Given that it’s the same household income: –if factors affect the satisfaction with household income (SWHI) of two members of a heterosexual couple differently we assume: those factors are influencing relative access to household resources –but must also allow for other well-known influences on such subjective assessments We are interested primarily in factors that can be influenced by policy – these may be at individual, household, local or national levels

Other influences on SWHI to allow for Individual personality traits (e.g. cheerfulness) –Some evidence that these do not change much over time –Using fixed effects regression in explaining SWHI should allow for these (cost is giving up use of inter-household variation) Aspiration and expectations –Assessment is relative to expectations and social comparisons captured by e.g. a reference group –Can control for some local environmental variables e.g. local unemployment rates – Unemployment may not lead to such a poor assessment of household finances if others around are unemployed (social comparison vs. assessment of chances of finding a job) can (in UK) include a human capital measure (as a measure of aspirations/ reference group) though this may also directly affect relative power can (in UK) include a measure of individual financial expectations –Beyond such controls, implicit assumption is that aspirations and expectations are shared between members of a couple – or are time-invariant (since using fixed effects) Endogenous choices and care for partners –Choices would generally be made by reference to a more general measure of well-being not just financial –Control for own and partner's “Satisfaction with life in general” –Can also try to allow shocks e.g. question asking about unanticipated costs

Other influences on SWHI to allow for Individual personality traits (e.g. cheerfulness) –Some evidence that these do not change much over time –Using fixed effects regression in explaining SWHI should allow for these (cost is giving up use of inter-household variation) Aspiration and expectations –Assessment is relative to expectations and social comparisons captured by e.g. a reference group –Can control for some local environmental variables e.g. local unemployment rates – Unemployment may not lead to such a poor assessment of household finances if others around are unemployed (social comparison vs. assessment of chances of finding a job) can (sometimes) include a human capital measure (as a measure of aspirations/ reference group) can (sometimes) include a measure of individual financial expectations –Beyond such controls, implicit assumption is that aspirations and expectations are shared between members of a couple – or are time- invariant (since using fixed effects) Endogenous choices and care for partners –Choices would generally be made by reference to a more general measure of well-being not just financial –Control for own and partner's “Satisfaction with life in general”

Explaining SWHI The individual factors in which we are interested are : –how the man and woman spend their time: labour market status hours of housework The household factors in which we are interested are: –number and age of children –proportion of household income coming from earnings –proportion of any earnings brought in by women: in five categories (since effects are clearly non-linear) Using panel data can use fixed effects regression to control for time-invariant factors: –Allows us to strip out personality effects –Cannot then explain variations between couples

West Germany and the UK Both traditionally male breadwinner models –West Germany by design conservative welfare state: dependents’ benefits through family breadwinners’ insurance rights Joint taxation (income splitting) Welfare system gives strong financial support for at home motherhood: –Long maternity leave 100% earnings replacement –Generous child benefit –UK by neglect: residual welfare state: little responsibility for family policy unless family cannot provide; No support for dependents in tax system Welfare system focused on poverty alleviation alone: –Lower child benefit but with means tested top-ups (child tax credits) –Maternity leave badly paid –West Germany and UK: very little childcare provision, until recently, still little for under 3s huge full-time employment gap between mothers of young children and other women –Maternal employment rates high in UK, but mainly part-time –Traditionally low in West Germany, still largely part-time Both had, until recently, very high gender pay, hours and earnings gaps - still high Both have useful household panel data sets

BHPS and GSOEP In period covered by our data, , rise of “new social risks” particularly: –rising costs of pensions with an aging population –increased family breakdown. In response both Germany and UK have adopted policies designed to –encourage women’s employment –enable (especially) child and elder care to be combined with employment –changes in same direction in both countries though somewhat different timing

Results: source of hh income In both UK and Germany, earning a larger proportion of income (cf equality) generally improves own SWHI more than that of partner, except that: –in UK woman has to earn a lot more than man for that to be the case –In Germany not true if woman earns a great deal more We interpret that as earning higher share giving greater relative access to household income –Doing gender my complicate this when women earn more??? Distribution of income makes less difference in Germany than in UK Nevertheless, in these societies with male breadwinner traditions inequality of earnings –In UK, gives both man and women higher SWHI –In Germany, gives man but not woman higher SWHI Higher share of earnings in hh income but also no earnings at all (no data on to whom benefits are paid) –In UK increase woman's relative access to household income –In Germany other way around Maybe to do with different money management systems –women known to have more responsibilities for money management in poorer households

Results: partners’ employment status In both countries, less than full-time employment leads to fall in SWHI both absolutely and relative to partner's for both men and women –fall in overall financial confidence and –reduction in access to hh income Unemployment particularly reduces SWHI in both countries –but less in Germany than in UK (better and more secure unemployment benefits) In addition –Men affected more by own status than partner’s in all respects (much more so in UK w.r.t. unemployment), –Woman affected significantly more by her partners’ unemployment than her own in UK –Woman affected significantly more by her own inactivity than by her partner’s in Germany

Results: partners’ hours of housework In both UK and Germany, SWHI reduced for men by doing more housework (and for women in UK); –More so for men than for women (significantly only in UK) –Doing housework leads to loss of access to hh income for men in UK –Women in UK lose more SWHI from partner doing housework than themselves

Results: children In UK: –Pre-school children result in lower SWHI for women but not men: i.e. pre-school children mean less access to hh income for women Could also be due to more recognition of costs? In Germany: –Children up to 11years old result in higher SWHI for both men and women, especially for 5-11 year olds –And higher for women than men so give greater access to hh income for women Higher child benefit/fewer financial worries? More costs of young children covered by collective provision Lower birth rate/ selection effect?? children more planned?

Germany and UK Share of earnings and employment status have effects in both countries: –Being the higher earner and being in full-time employment increases relative access to household income –Being unemployed particularly decreases it But some exceptions: –“Doing gender” may complicate this when the woman earns more –Effects are less pronounced in Germany than in the UK, especially for unemployment Young children are viewed differently –Positive effect on SWHI in Germany and empowers women –Disempowering effect for women in UK So perhaps Germany’s more generous unemployment and child benefit mitigate some the effects of its conservative welfare system

Policy implications Different views of inequality support this: –In both countries, men much less concerned with partner's labour market status than their own and favour inequality of earnings (in which ever direction) –In UK women more worried by partner’s status than their own and by their partner doing housework than themselves and both men and women favour inequality (in either direction) and men particularly disempowered by doing housework –In Germany, women more worried by own inactivity and unemployment than their partner’s and do not favour unequal earnings –In Germany women more challenging of sole breadwinner model than in UK System that is male breadwinner through neglect, i.e. lack of supportive policy, may retain its male biases longer than one which actively supports and then tries to modify a sole breadwinner model Policy that responds to new social risks by increasing benefits focused on enabling women to stay in paid work may be more effective in reducing intra-household inequalities, than policies which only help the lower paid: –Germany: better paid but short maternity leave, improved public childcare provision –UK: long but poorly paid maternity leave, expensive private childcare provision, subsidised only for the lower paid

What next? Compare West and East Germany West Germany male breadwinner –though with some recent changes in policy East Germany traditionally adult worker model –extensive state childcare provision –high maternal employment Since unification West and East Germany have had similar policies imposed on different practices: policies after unification more like those of the former West than East Germany But changes since moving more towards encouraging mothers’ employment –e.g change in parental leave and extensions of childcare provision to under 3’s –have been shown to have had an effect on women's participation rates Some policies therefore work out in different ways because of past practices: –e.g. for childcare the ratio of children under 3 years who are enrolled in child care in the year 2007 shows much higher rates in East Germany

Proportion of children under 3 years old enrolled in child care: Germany, 2007

Results: source of hh income Inequality –East Germany: man gains small amount of access to household income from earning more, woman does not –West Germany: whoever earns more gains access to household income except when women earns much more –Male breadwinner norms in West Germany, power of earnings wins over this in East No earnings at all and higher share of earnings in hh income –Both strongly increase man’s access to hh income in both parts of Germany –Mixed benefits and earnings favour women’s access to household income

Results: partners’ employment status Woman’s SWHI affected significantly more by her own employment status than by her partner’s in East Germany Woman’s SWHI affected significantly more by her partners’ less than FT employment status than her own in West Germany In East Germany men’s SWHI more affected by partner's SWHI than in the West, though men’s SWHI still affected more by own status than partner’s in both parts of Germany Gender differences in effects smaller in East than West Germany Consistent with male breadwinner history in West, adult worker model in East

Results: partners’ hours of housework No significant housework effects (or gender differences in housework effects) in East Germany Significant reduction in SWHI through doing housework only for men in West Germany

Results: children Younger children under 11 years old: –Given women increased access to household income in both parts of Germany –Stronger effect in East than West Germany –Better provision for combining motherhood with employment in East??