A Transaction Cost Approach to Outsourcing by Households

Abstract

A growing body of literature suggests that the outsourcing of household chores and caring responsibilities is increasingly used by couples as a strategy for more effectively combining work and family life. In the outsourcing process households contract out functions that were previously done in-house to commercial or public-sector service providers. The difficulties facing couples, especially women, in balancing work and family responsibilities affect both their fertility and their employment characteristics. Policy initiatives taken by welfare states seeking to raise low fertility are often aimed at decreasing this role incompatibility, especially by allowing women to maintain their careers while bringing up children (e.g., through longer maternity leave with protection against dismissal, access to affordable childcare, shorter working hours, part-time or flexible jobs, etc.). Apart from being themselves providers of childcare services, some governments also actively encourage households to outsource other tasks, such as housework, in order to reduce women's role incompatibility and allow them to join the labor force.The commercial sector also provides households with services that were once performed within families. In the "new" service economy, families in effect externalize certain aspects of household production, such as childcare, food preparation, and cleaning, and purchase these services in commercial markets. As Esping-Andersen (2009) has noted, a century ago service consumption was mostly driven by demand from privileged rich groups within society, while today's demand is more widely spread through the population. The supply side also plays a part: growing numbers of low-wage workers, many of them poorly protected immigrants, provide a pool of potential service workers (Hondagneu-Sotelo 2001).

Is a positive link between human development and fertility attainable? Insights from the Belgian vanguard case

“…Parallel to the emergence of this new evidence, new theoretical frameworks have been presented which argue that increases in fertility among women with high socio-economic positions are linked to improvements in gender equality (e.g. Esping-Andersen & Billari, 2015;Goldscheider, Bernhardt, & Lappegard, 2015) or enhanced possibilities to outsource household and childrearing tasks (Brewster & Rindfuss, 2000;Raz-Yurovich, 2014Rindfuss, Guilkey, Morgan, Kravdal, & Guzzo, 2007).…”

“…Belgium has over the last decades continuously been one of the top-ranked countries worldwide in formal childcare provision (Gornick, Meyers, & Ross, 1997;Klüsener et al, 2013), and was one of the first countries to be included in a short list of nations that meet the Barcelona target of 33 per cent childcare enrolment for children aged 0-3 (Population Council, 2006). In addition, Belgium is also a forerunner country with respect to the subsidized outsourcing of household work, with a system of service vouchers that subsidizes 70 per cent of the cost of outsourcing housework (Marx & Vandelannoote, 2014;Raz-Yurovich, 2014). We believe that the vanguard status of Belgium makes it an interesting laboratory to explore how a positive relationship between fertility and human development can be obtained both at the individual and aggregate level.…”

Trust and Fertility Dynamics

“…As women attend higher education in ever greater numbers and aspire to combine work and family, the demand for outsourcing care activities will naturally increase. Indeed, several studies show that outsourcing domestic services or goods has become an alternative strategy to housewifery as women’s gender roles are changing (Raz-Yurovich 2014; De Ruijter, Treas and Cohen 2005). From a supply side perspective, policy makers or the private sector will only create, respectively, institutions or services to outsource care activities if they expect that there is a demand for them.…”

“…While the relationship between trust and outsourcing is well established in the management literature, it is only recently that it has been extended to the family (Raz-Yurovich 2014). De Rujter, van der Lippe and Raub (2003), using a transaction-cost framework, develop a theoretical model to explain why trust should matter for outsourcing decisions within families.…”

“…De Rujter, van der Lippe and Raub (2003), using a transaction-cost framework, develop a theoretical model to explain why trust should matter for outsourcing decisions within families. Extending De Rujter, van der Lippe and Raub’s theoretical model (2003), Raz-Yurovich (2014) provides a comprehensive framework to understand the importance of outsourcing housework and care activities for work-family balance. As stressed by Rujter, van der Lippe and Raub (2003), she argues that trust is an essential facilitator for families when it comes to outsourcing decisions.…”