It is used to explain outcomes unique to family—such as marriage, the decision to have children, fertility, time devoted to domestic production, and dowry payments using economic analysis.
The family, although recognized as fundamental from Adam Smith onward, received little systematic treatment in economics before the 1960s.
Important exceptions are Thomas Robert Malthus' model of population growth[1] and Friedrich Engels'[2] pioneering work on the structure of family, the latter being often mentioned in Marxist and feminist economics.
In The Wealth of Nations, Adam Smith alludes to the importance of the family in his chapter on Wages.
Smith wrote: "But though in disputes with their workmen, masters must generally have the advantage, there is, however, a certain rate below which it seems impossible to reduce, for any considerable time, the ordinary wages even of the lowest species of labour....A man must always live by his work, and his wages must at least be sufficient to maintain him.
"[23] Accordingly, the wage received by the worker must be high enough to support the family in order to ensure the inter-generational reproduction of the working class.
[1] The reproduction of the labor force, namely the way workers raise children to replace themselves, is a central issue in Marxist Theory.
This implies that for Marx the wage that workers need to sustain their families is one of the basic factors that regulates the economy.
[2] According to Engels, the monogamous family, consisting of one man, one woman and children, is something created by the class system.
Other Marxist economists of the late 19th and early 20th century like Bebel, Luxemburg, and Lenin also wrote on the necessity of bringing women back into the public industry.
[28] The marginalist school, developed in the late 19th century, moved the focus of economics further away from family.
"[29] Contemporary family economics has also been enriched by contributions of Marxists and radical feminists written since the 1970s.
Marxist-feminists subsequently sought to integrate these two approaches by trying to show how patriarchy and capitalism interact with each other.
Some Marxists and feminists view marriage of woman and man as analogous to the employment relationship in a capitalist society.
For example, Shoshana Grossbard models both men and women as possibly hiring each other's work in household production, which she calls "spousal labor"[31] or "Work-In-Household (WiHo)".
[38] According to some neoclassical theories, the division of labor between household and market work is related to the utility function of the individuals within the family.
This has been attributed by Jeremy Greenwood, Ananth Seshadri and Mehmet Yorukoglu to the introduction of time-saving appliances in the home.
For example, in England in the second half of the 19th century there was a campaign, supported by working class men, to restrict female market employment.
Shoshana Grossbard has written on how marriage markets influence women's labor force participation.
According to Amartya Sen in some cases the bargaining agents might not have proper perceptions of either their economic contributions to the household or their interests.
[47] According to Sen, when women do market work their bargaining power will improve, in part due to better perceptions of contribution and self-interest.
In order to better compare the effects of income and fertility on economics, Becker makes two assumptions: preferences and quantity-versus-quality.
Becker used different comparisons to determine the level of elasticity of income on quantity and quality.
[53] The introduction of birth control greatly affected fertility decisions and mitigated problems involved with unplanned pregnancy.
The pill allowed a separation between the two decision: when to get married and how often to engage in sexual activities without the repercussion they faced back then.
They must take time off the workforce to care for the infants and once returning, they suffer a decrease in pay.
It is important that both individuals consider income and their financial position before making a big decision.