The Role of the Care Economy in the National Economy: Beyond GDP

Every day, billions of hours of work happen that never show up in any official economic measure. This invisible labor-cooking meals, caring for children, tending to elderly parents, cleaning homes-sustains families and communities worldwide. Yet traditional economics has long turned a blind eye to this care economy, treating it as somehow separate from “real” economic activity. This oversight isn’t just an academic oversight; it has profound implications for gender equality, policy-making, and our understanding of what truly drives prosperity.

Why traditional economics ignores unpaid care work 🔗

For decades, economists focused narrowly on market transactions when measuring economic output. If money changed hands, it counted. If it didn’t, it was invisible. This approach meant that unpaid domestic and care work could represent over 40% of GDP in some countries based on conservative estimates, yet remained completely absent from official statistics like Gross Domestic Product.

The problem runs deeper than mere omission. Traditional economic frameworks were built on assumptions that treated households as consumption units rather than production sites. The System of National Accounts, which guides how countries measure their economies, drew a “production boundary” that excluded most household activities. This boundary wasn’t neutral-it systematically devalued work predominantly performed by women.

The complex challenge of putting a price on care 🔗

How do you assign monetary value to a mother feeding her child or an adult caring for an aging parent? Economists have developed several approaches to tackle this challenge, though each comes with its own controversies.

The replacement cost method 🔗

One straightforward approach asks: what would it cost to hire someone to do this work? This replacement cost method calculates the value by estimating the cost of hiring individuals in the market to perform these tasks. If you’re caring for a child, look at what you’d pay a nanny. If you’re cooking meals, consider restaurant prices for comparable food.

The advantage here is simplicity and relatability. The challenge? It cannot capture the emotional value of having a parent care for their own children rather than a hired caregiver. There are dimensions to care work that resist commodification.

The opportunity cost method 🔗

This alternative asks a different question: what income are caregivers forgoing by doing unpaid work instead of paid employment? Using the opportunity cost approach, unpaid housework values at approximately 27% of GDP on average across OECD countries, significantly higher than replacement cost estimates.

This method recognizes that highly educated professionals who step back from careers to provide care are forgoing substantial potential earnings. However, critics note it may overestimate value when caregivers wouldn’t necessarily be employed full-time, or when market wages don’t fully reflect productivity.

The input-output method 🔗

A third approach focuses on the economic value of goods and services produced through unpaid work. This method calculates what these outputs would fetch in the open market-the meals prepared, the clean living spaces maintained, the well-cared-for children and elders.

The staggering magnitude of invisible work 🔗

When economists finally began measuring unpaid care work systematically, the numbers were jaw-dropping. Globally, around 16.4 billion hours are devoted to unpaid care work daily-equivalent to 2 billion people working full-time with no pay, or roughly 25% of the world’s entire population.

The gender disparities are even more striking. Women perform three-quarters of all unpaid care work globally, dedicating an average of 4 hours and 25 minutes daily compared to men’s 1 hour and 23 minutes. This equals approximately 201 working days per year for women versus just 63 for men.

In India, these gaps are particularly pronounced. Women spend eight times more time on unpaid care work than men, far above the global average. Recent data from India’s Time Use Survey shows that women of working age spend 5.6 hours daily on unpaid work versus just 30 minutes for men.

From Nairobi to national accounts: decades of advocacy 🔗

Recognition of the care economy didn’t happen overnight. The 1985 United Nations Third World Conference on Women in Nairobi marked a turning point, with women’s organizations demanding that unpaid household work be acknowledged in national economic frameworks.

The breakthrough came in 1993 when the United Nations revised its System of National Accounts to recommend that countries develop “satellite accounts” for household production. These parallel accounting systems would sit alongside traditional GDP measures, making the invisible visible without disrupting established economic statistics.

Since then, momentum has built steadily. Due partly to UN resolutions on improving the visibility of women’s unpaid work, more than 87 time-use surveys were conducted in the first decade of this century-more than during the entire 20th century.

Time use surveys: revealing the hidden economy 🔗

Time use surveys have become the primary tool for understanding how people actually spend their days. These surveys ask individuals to recall their activities during the previous 24 hours in half-hour intervals, then classify them into categories including employment, production for own use, unpaid domestic services, and caregiving.

The insights from these surveys extend far beyond mere statistics. They reveal how infrastructure deficits force women into time poverty. When communities lack clean water access, women walk hours each day to fetch water-time they could otherwise spend on education or income-generating work. When fuel is scarce, gathering firewood becomes another unpaid task.

Public investment in infrastructure like water and fuel access can significantly reduce women’s unpaid work burden and generate positive social externalities, such as increased school enrollment for girls who no longer need to help with water collection.

India’s experience with time use data 🔗

India conducted its first national Time Use Survey in 2019, providing unprecedented insights into how Indians allocate their time. The findings were sobering. Using time use data and wage information, researchers estimated that women’s unpaid domestic and care work in India represents between 15% and 17% of GDP-a massive economic contribution that traditional measures completely overlook.

When India’s second Time Use Survey data emerged in 2024, little had changed. Women still spent 305 minutes daily on unpaid domestic work, nearly six times more than men’s 56 minutes. Despite women’s increasing participation in paid employment, the burden of unpaid work remained stubbornly persistent.

Building a gender-sensitive economic system 🔗

Recognizing and measuring unpaid care work is just the first step. Truly addressing the care economy requires comprehensive policy interventions that redistribute work more equitably and invest in care infrastructure.

Regular time use surveys and gender budgeting 🔗

Countries need to institutionalize regular time use surveys-not as one-off exercises but as routine statistical collection comparable to labor force surveys. This data then needs to inform budget decisions through gender-responsive budgeting, where government spending is analyzed for its differential impact on women and men.

Gender responsive budgeting has potential to strengthen accounting’s constitutive values and challenge the seemingly neutral character of government finances, ensuring that care economy considerations shape fiscal policy rather than remaining invisible.

Creating satellite accounts 🔗

Rather than attempting to incorporate unpaid work directly into GDP-which would require redefining decades of economic conventions-countries can create satellite accounts. These parallel systems track the value of unpaid work using established methodologies while keeping traditional GDP measures intact for international comparisons.

Satellite accounts view caring labor in terms of market price and make the division of labor more explicit, helping policymakers understand the full economic picture when making decisions about care services, parental leave, or infrastructure investments.

Investing in public care services 🔗

Perhaps most crucial is direct investment in care infrastructure-affordable childcare centers, eldercare facilities, and paid parental leave policies. According to one estimate, a $1.3 trillion investment in social jobs like the care economy would result in a $3.1 trillion GDP return and create more than 10 million jobs in the United States.

These investments don’t just redistribute care work; they create quality employment, predominantly for women, while enabling other women to participate more fully in the labor market. It’s an economic multiplier that traditional frameworks have consistently undervalued.

Gender-disaggregated data in social accounting matrices 🔗

Social Accounting Matrices provide comprehensive snapshots of how money and resources flow through an economy. By incorporating gender-disaggregated data into these matrices, economists can better understand how and why women’s economic activity often goes unmeasured and undervalued.

These enhanced matrices reveal not just that women do more unpaid work, but how that work subsidizes other economic sectors, enables formal employment, and creates value that ripples throughout the economy. They make it possible to model how policies-from minimum wages to childcare subsidies-will affect men and women differently.

Why this matters beyond gender equality 🔗

Recognizing the care economy isn’t just about fairness, though that would be reason enough. It’s about building more accurate, sustainable economic systems. Care is what makes all other jobs possible-individuals can work in formal employment because children, older adults, and dependent family members are being cared for.

When we ignore the care economy, we make policy mistakes. We underinvest in infrastructure that could multiply productivity. We design labor regulations that assume workers have no care responsibilities. We measure economic growth while missing massive sources of value creation.

The COVID-19 pandemic revealed just how fragile this system is. When schools closed and formal care arrangements collapsed, the impossible burden on working parents-especially mothers-became impossible to ignore. Many countries saw women’s labor force participation plummet as they shouldered increased care responsibilities.

Moving forward, creating a truly gender-sensitive economic system means regular measurement through time use surveys, transparent accounting through satellite systems, intentional investment in care infrastructure, and policy frameworks that recognize care as productive work deserving of public support. It means understanding that an economy built on invisible, unpaid labor performed disproportionately by women is neither fair nor sustainable.

What do you think? If your own unpaid care work were valued at market rates, how much would it contribute to your household’s economic output? And what policy changes do you believe would most effectively redistribute care responsibilities and support those who provide both paid and unpaid care?

References

1. https://ilostat.ilo.org/topics/unpaid-work/measuring-unpaid-domestic-and-care-work/
2. https://www.developmentanalytics.org/estimating-the-economic-value-of-unpaid-care-work
3. https://www.oecd.org/content/dam/oecd/en/publications/reports/2021/07/bringing-household-services-out-of-the-shadows_205f1a30/fbea8f6e-en.pdf
4. https://www.undp.org/latin-america/blog/missing-piece-valuing-womens-unrecognized-contribution-economy
5. https://www.orfonline.org/research/building-india-s-economy-on-the-backs-of-women-s-unpaid-work-a-gendered-analysis-of-time-use-data
6. https://static.pib.gov.in/WriteReadData/specificdocs/documents/2024/mar/doc202435319501.pdf
7. https://hdr.undp.org/content/valuing-care-work
8. https://www.policycircle.org/opinion/time-use-survey-womens-unpaid-work/
9. https://www.sciencedirect.com/science/article/abs/pii/S1045235420300320
10. https://www.eldis.org/document/A52534
11. https://www.weforum.org/stories/2024/10/caring-care-economy-key-growth-and-well-being/
12. https://research.american.edu/careworkeconomy/blog/2019/11/01/lofgren-et-al-2019/