Synthesizing feminist and post-Keynesian/Kaleckian economics for a purple–green–red transition

Onaran, Özlem; Oyvat, Cem Article Synthesizing feminist and post-Keynesian/Kaleckian economics for a purple–green–red transition European Journal of Economics and Economic Policies: Intervention (EJEEP) Provided in Cooperation with: Edward Elgar Publishing Suggested Citation: Onaran, Özlem; Oyvat, Cem (2023) : Synthesizing feminist and post-Keynesian/ Kaleckian economics for a purple–green–red transition, European Journal of Economics and Economic Policies: Intervention (EJEEP), ISSN 2052-7772, Edward Elgar Publishing, Cheltenham, Vol. 20, Iss. 2, pp. 317-337, https://doi.org/10.4337/ejeep.2023.0117 This Version is available at: https://hdl.handle.net/10419/284334 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Synthesizing feminist and post-Keynesian/ Kaleckian economics for a purple–green–red transition* Özlem Onaran** and Cem Oyvat*** Institute of Political Economy, Governance, Finance and Accountability, University of Greenwich, UK The aim of this article is to discuss why we should synthesize feminist and post-Keynesian/Kaleckian economics. We answer three related questions. Why does post-Keynesian economics need feminist economics? Why does feminist economics need post-Keynesian macroeconomics? Finally, what is the relevance of synthesizing feminist and post-Keynesian economics for policy analysis in the twenty-first century? We then present a theoretical synthesis model bringing together and extending the existing macroeconomic models in feminist post-Keynesian economics. Finally empirical findings based on this synthesis model are discussed in a policy context. Keywords: feminist economics, post-Keynesian economics, Kaleckian economics, care economy, green economy, employment, gender JEL codes: E12, B53, E24, E62, Q54, Q58 1 INTRODUCTION The aim of this article is to discuss why and how we should synthesize feminist economics and post-Keynesian/Kaleckian economics (PKE). We discuss three reasons why such a synthesis enriches post-Keynesian macroeconomic theory in order to adequately address the challenges of the twenty-first century: firstly, post-Keynesian economic analysis benefits from integrating feminist theory of both paid and unpaid care work, and their effects on wellbeing, productivity, labour supply and fertility (Braunstein et al. 2011; Onaran et al. 2022a, 2022b, 2023). Secondly, feminist theory of gendered social norms and inequalities has significant implications for the behavioural analysis of household consumption and private investments in post-Keynesian demand-led models (Onaran et al. 2022a; Seguino/Floro 2003; Morrison et al. 2007). Thirdly, different types of government expenditures and fiscal policy influence gender inequalities due to the occupational segregation * The support of the Economic and Social Research Council (ESRC) via the Rebuilding Macroeconomics Network Plus grant; the research grant from the International Trade Union Confederation and Friedrich Ebert Foundation, and funding from the Care Work and the Economy initiative of the Program in Gender Analysis in Economics at American University are gratefully acknowledged. We are grateful for the comments by Yannis Dafermos and Engelbert Stockhammer and participants of the FMM Conference in October 2023 in Berlin. The usual disclaimers apply. ** Corresponding author. Email: [email protected]. *** Email: [email protected]. Received 27 March 2023, accepted 24 May 2023 European Journal of Economics and Economic Policies: Intervention, Vol. 20 No. 2, 2023, pp. 317–337 First published online: August 2023; doi: 10.4337/ejeep.2023.0117 © 2023 The Author Journal compilation © 2023 Edward Elgar Publishing Ltd The Lypiatts, 15 Lansdown Road, Cheltenham, Glos GL50 2JA, UK and The William Pratt House, 9 Dewey Court, Northampton MA 01060-3815, USA This is an open access work Invited Article in economies and have different multiplier effects (İlkkaracan et al., 2015, 2021; İlkkaracan/ Kim, 2019; Onaran/Oyvat, 2023; Onaran et al. 2023). Coming to the other side of the question, does feminist economics need post-Keynesian economics? A related question that has arisen is: ‘does feminist economics need a macroeconomic model?’–questioning the usefulness of aggregate macroeconomic analysis from a heterodox feminist point of view, which we have come across during the last decade of gendering macroeconomics projects. Feminist economics has a large microeconomic research strand, and while gendering macroeconomics has been a project spanning 30 years since the landmark 1995 paper by Ertürk/Çağatay (1995), the balance is still skewed towards the micro side, apart from the notable exceptions cited above. In our research on gendering macroeconomics, we build on the post-Kaleckian strand within post-Keynesian economics, synthesizing Marxist and Keynesian concepts with feminist economics for four reasons: firstly, demand-side constraints and involuntary unemployment are important to analyse economic inactivity, underemployment or unemployment of women. Secondly, the modelling of the effects of class distribution of income on demand and supply offers a basis to integrate the effects of gender pay and employment gaps. Thirdly, the presence of multiplier effects of fiscal policy facilitates the analysis of the effects of different types of government spending on gender distribution of income and employment and productivity. Fourthly, the structural features of the model in terms of sectoral composition, oligopolistic markets, import dependency, balance-of-payments constraints, international currency hierarchies and bargaining power allow the integration of gender inequalities. Last, but not the least, from a policy perspective, synthesizing feminist and postKeynesian economics enhances our ability to address the multiple crises of ecology, care, inequalities and technological change by offering an analytical framework to integrate both the care economy and the green economy (Dafermos/Nikolaidi 2019, 2022; Onaran/Oyvat 2022, 2023). In the rest of this article, Section 2 discusses this question from the perspectives of postKeynesian economics, feminist economics and policy analysis. After establishing that a synthesis of feminist and post-Keynesian economics enhances the analytical strengths of macroeconomic analysis, Section 3 presents a theoretical synthesis model bringing together and extending existing macroeconomic models in feminist post-Keynesian economics. Section 4 presents the main policy lessons based on the empirical findings of this feminist structuralist/post-Keynesian analysis. Section 5 concludes with policy implications. 2 WHY AND HOW WE SHOULD SYNTHESIZE FEMINIST AND POST-KEYNESIAN ECONOMICS? The question has three sides to it: on one side of the medallion, why does post-Keynesian economics need feminist economics? And, on the other side of the medallion, why does feminist economics need post-Keynesian macroeconomics? Finally, what is the relevance of synthesizing feminist and post-Keynesian economics for policy analysis in the twentyfirst century, beyond being a theoretical improvement in macroeconomic modelling? 2.1 Why does post-Keynesian economics need feminist economics? The question of why post-Keynesian economics needs feminist economics involves a subquestion on why we need to enrich the supply-side analysis in post-Keynesian demand-led 318 European Journal of Economics and Economic Policies: Intervention, Vol. 20 No. 2 © 2023 The Author Journal compilation © 2023 Edward Elgar Publishing Ltd growth models. There are three reasons why post-Keynesian economics needs to incorporate feminist economics for a macroeconomic theory adequate to analyse the challenges of the twenty-first century: firstly, the feminist theory of labour as a means of production that needs to be reproduced recognizes the care economy as a key sector in terms of both unpaid domestic work and paid work in the private market sector and public sector. Integrating both the unpaid and paid work in the care economy facilitates an accurate analysis of the demandand supply-side interactions by crystallizing the effects on wellbeing, productivity, labour supply and fertility. For example, in the post-pandemic phase of the ‘Great Resignation’, central banks such as the Bank of England place an excessive emphasis on the tightness of the labour markets based on a rather narrow mainstream New Keynesian NAIRU thinking, missing the broader range of policy tools beyond interest rates to address the root cause of the economic inactivity and labour shortages related to lack of infrastructure in the care economy in health care, social care and childcare and reliance on unpaid domestic care work of women, which leads to supply bottlenecks in the economy. The recognition of the supply-side effects of the care economy on productivity, labour supply and social fabric by feminist economists implies that it has to be defined as social infrastructure rather than current spending, which in turn has crucial implications for fiscal or industrial policy priorities and fiscal credibility rules which are adopted by governments defining the limits of borrowing for investing in public infrastructure (Elson 2016, 2017). Secondly, gendered social norms and intra-household power relations alongside the structure of the social welfare state lead to a gendered division of labour in both the unpaid domestic work and occupational segregation in paid work, which in turn leads to behavioural differences between men and women and affects household consumption or private investment on the demand side and labour supply and productivity on the supply side. The feminist recognition of gender inequality in intra-household decision-making as opposed to modelling the household as a harmonious aggregate unit is another essential dimension of the analysis of power relations which post-Keynesian economics can benefit from. These have crucial implications for macroeconomic behaviour. For example, both macro and microeconomic research shows that the marginal propensity to consume in the care economy is larger for women than men and the marginal propensity to consume in the rest of the goods and services is larger for men than women (Onaran et al. 2022a, 2022b; Seguino/Floro 2003; Morrison et al. 2007; Lee/Pocock 2007). The microevidence for developing countries suggest that the overall propensity to save is higher for women due to the higher uncertainty faced by them (Seguino/Floro 2003). Seguino (2012) suggests that in developing countries, women are more likely to consume domestic goods, while men are more likely to consume a higher proportion of luxury and/or imported goods (such as cell phones, automobiles and televisions). Taking on board the interaction of the demand and supply sides, more income in the hands of women is expected to have positive effects on labour productivity in the medium run by increasing the private household spending in the care economy. Thirdly, women’s concentration in the care economy in terms of both unpaid and paid work and gendered and racial profiling of jobs and labour market segregation affects the bargaining power of women and racial minorities in wage negotiations as well as intrahousehold bargaining power of women, thereby leading to a rise or persistence in gender, race and class inequalities. Following this occupational segregation patterns, feminist macroeconomics also provides a gendered framework for analysing the effects of different types of government spending and allows for gender mainstreaming of macroeconomic policies. Post-Keynesian macroeconomic analysis of the dynamics of inequality and distribution would be incomplete without integrating the macroeconomic interactions between gender and class inequalities and demand and employment. Synthesizing feminist and post-Keynesian/Kaleckian economics for a purple–green–red transition 319 © 2023 The Author Journal compilation © 2023 Edward Elgar Publishing Ltd Integrating these aspects, Braunstein et al. (2011), Seguino (2010, 2012), Onaran et al. (2022a, 2022b, 2023), Onaran/Oyvat (2022), Oyvat/Onaran (2022) and Hein (2020) incorporate both demandand supply-side analyses within feminist structuralist/postKaleckian theoretical models, allowing for both positive and negative effects of gender equality on the demand side and positive effects on the supply side. Braunstein et al. (2020) analyse how care models, globalization and macroeconomic policy stance shape the development trajectories using a principal component analysis. Another body of feminist structuralist macroeconomic research use input–output tables to analyse the impact of public spending in social care and education on the employment of women and men (Antonopoulos et al. 2010; İlkkaracan et al., 2015, 2021; İlkkaracan/Kim, 2018; De Henau et al., 2016). Antonopoulos et al. (2010) and İlkkaracan et al. (2015, 2021) extend this macro analysis using micro household data to match the macro labour demand with personal characteristics of individuals. These studies do not take the medium-run productivity effects and the supply side into account. 2.2 Why does feminist economics need post-Keynesian macroeconomics? Before answering this question, a look at the developments in mainstream economics is in place here. Mainstream neoclassical macroeconomic models have essentially ignored feminist economics, as can be illustrated most acutely by the lack of citations to the main field journal Feminist Economics, and/or abstained from referring to ‘gender’as a socially constructed category but elaborated on the intra-household bargaining, developing the ‘economics of the household’further focusing on the supply-side effects of wage gaps on labour supply, fertility, savings and the accumulation of human capital (Becker et al. 1990; Benhabib et al. 1991; Doepke/Tertilt 2016; Agenor/Agenor 2014; Cavalcanti/Tavares 2016; Fukui et al. 2019). These models do not analyse the gendered demand-side effects and constraints in demand matching the increases in women’s education and labour force participation (Seguino 2017; Onaran 2016a). Empirical mainstream growth models using panel data estimate the supply-side effects of equality in education and labour supply and the direct and indirect/intergenerational effects on productivity (Phipps/Burton 1998; Morrison et al. 2007; Klasen/Lamanna 2009; Cuberes/Teignier 2014). Reductions in labour market imperfections such as wage discrimination and occupational segregation are expected to stimulate growth via supply-side effects (Seguino 2017). What does post-Keynesian economics have to offer to heterodox feminist economics different from mainstream economics? Extending the post-Kaleckian strand within post-Keynesian economics, synthesizing Marxist and Keynesian concepts with feminist economics, we give four –reasons comprising the answer: 1 firstly, the recognition of demand-side constraints, and consequently the presence of excess capacity and involuntary unemployment in the economy, which is ignored by the mainstream neoclassical models of full employment, where ‘non-employment’is a voluntary labour supply choice for ‘leisure’by the utility-maximising working women or men, is important to understand the demand-side reasons behind economic inactivity, underemployment or unemployment of women. Secondly, the explicit modelling of the effects of class distribution of income on demand and output in Kaleckian models with the dual effects of wages on not just production costs but also aggregate demand and supply lends itself to integrating the effects of 1. See Onaran (2016a) for a more detailed description of the features of the post-Kaleckian models relevant to feminist economic analysis. 320 European Journal of Economics and Economic Policies: Intervention, Vol. 20 No. 2 © 2023 The Author Journal compilation © 2023 Edward Elgar Publishing Ltd other dimensions of within working-class inequality stemming from both gender pay and employment gaps. Post-Keynesian/post-Kaleckian demand-led macroeconomic models allow for both positive and negative effects of a fall in the labour share in income on aggregate demand (Bhaduri/Marglin 1990; Naastepad/Storm 2006/7; Hein/Vogel 2008; Stockhammer et al. 2009; Onaran/Galanis 2014; Onaran/Obst 2016). Onaran et al. (2023) introduce both gender pay gaps and a further distributional dimension along class lines in terms of wealth distribution. Thirdly, the post-Keynesian demand-led growth models allow for multiplier effects of fiscal policy on demand (Mott/Slattery 1994; You/Dutt 1996; Blecker 2002; Seguino 2010, 2012; Palley 2013; Commendatore et al. 2011; Allain 2015; Tavani/Zamparelli 2017a; Ko 2018; Hein 2018; Obst et al. 2020; Onaran et al. 2022a, 2022b, 2023), which can be extended to analyse the effects of different types of government spending on not just demand but also gender distribution of income and employment as well as on the supply side on productivity. 2 Fourthly, the structural features of the economy in terms of sectoral composition, oligopolistic price setting, import dependency, balance-of-payments constraints, international currency hierarchies and unequal bargaining power between labour and capital present a realistic model of the economy and allow integrating gender inequality in the distribution of unpaid and paid work, occupational segregation and power relations. Wages and gender gaps are an outcome of a bargaining process between employers and workers, as opposed to the neoclassical theory where they are determined by the marginal product of different types of labour. All these structural features of the economy have real effects on the demand and supply side. 2.3 What is the relevance of synthesizing feminist and post-Keynesian economics for policy analysis? From a policy analysis perspective, it is a particularly timely task to synthesize feminist and post-Keynesian economics in order to address the multiple crises of ecology, care, inequalities and technological change in the age of robotization. This synthesis offers a unified macroeconomic modelling framework integrating both the care economy and the green economy. 3 Distribution of income along gender and class lines as well as distribution of public spending in physical versus social infrastructure have not only important macroeconomic and distributional effects but also environmental effects. This synthesis model can provide the basis for a needs-based approach to fiscal policy, comparing the impact of different tools to fund fiscal policy without an illusion that we have to choose between competing investment priorities in the green or care economy or social housing. Onaran et al. (2023) and Onaran/Oyvat (2022, 2023) present models moving in this direction, and Nikolaidi (2022) presents a conceptual framework, but for a full macroeconomic model, the next stage of vital extension is to integrate an ecological block with the impacts on emissions, waste and biodiversity and their macroeconomic feedback effects. Post-Keynesian ecological global macroeconomic models, such as Dafermos/Nikolaidi (2019, 2022) incorporate the limits to material resources, the damage on GDP due to emissions, waste 2. Going beyond the short-run demand effects, a series of post-Keynesian models integrate the changes in productivity (Palley 1996, 2013, 2014; Stockhammer/Onaran 2004; Dutt 2010; Naastepad 2006; Setterfield 2006; Seguino 2010, 2012; Hein/Tarassow 2010; Tavani/Zamparelli 2017b; Onaran et al. 2022a, 2022b, 2023). 3. See Dafermos/Nikolaidi (2019, 2022) for a review of macroeconomic models synthesizing post-Keynesian and ecological economics, and one of the most developed examples of this synthesis. Synthesizing feminist and post-Keynesian/Kaleckian economics for a purple–green–red transition 321 © 2023 The Author Journal compilation © 2023 Edward Elgar Publishing Ltd and climate change, but they do not model the care economy or gender effects. Pollin et al. (2009, 2015, 2022) analyse the environmental and employment effects of investing in the green economy using input–output analysis and discuss the gender composition of new jobs created but do not explicitly model the care economy. 3 A FEMINIST STRUCTURALIST POST-KEYNESIAN/KALECKIAN THEORETICAL MODEL In this section, we present a feminist structuralist post-Keynesian/Kaleckian synthesis model, bringing together concepts from feminist, Marxist and Keynesian economics, building on Onaran et al. (2022a, 2022b, 2023), Onaran/Oyvat (2022, 2023) and Oyvat/Onaran (2022), which furthers the models by Braunstein et al. (2011) and Seguino (2010, 2012), incorporating explicit analysis of both the components of demand and supply side, class inequality in income and wealth and gender gaps in wages and employment, government spending in the care and green economy and employment. This synthesis modelisanapplicationofthepointsdiscussedinSection2onthewaysfeministand post-Keynesian macroeconomics can be integrated. The model in this paper extends Onaran et al. (2022a, 2022b, 2023) in five ways: 4 (i) it introduces public spending in the green economy defined as current and capital spending in renewable energy, energy efficiency and public transport, organic agriculture, forestry and circular economy as opposed to the simple sum of public sector gross fixed capital formation; (ii) labour supply is endogenous; (iii) wage bargaining of both men and women are endogenous; (iv) occupational segregation changes endogenously; (v) price effects of wages are explicitly modelled. The model presented here is the feminist post-Keynesian synthesis model that encompasses several features, and different modelling choices could be made to expand the relation between care economy and unpaid household labour or endogeneity of wages or labour supply or social norms. We leave the analysis of the full implications of these extensions, for example, the implications of endogenous wage bargaining process or occupational segregation on the dynamics of the economy for future research. On the green economy side, a caveat of the model for future development is the absence of modelling of carbon emissions or other environmental variables. The model is geared towards applicability to empirical estimation for policy analysis and the results of various applications are discussed in Section 4. The economy has three sectors: (i) the care economy, which consists of the current expenditure of the government in the care economy, that is, in education, childcare, healthcare and social care (producing human capabilities (Braunstein et al. 2011) using paid public sector employees); (ii) the rest of the market economy (denoted with script N); and (iii) the unpaid care sector. Workers are classified as men and women, whereas the profit-earning capitalist class is assumed to be genderless for simplicity. The variables corresponding to women and men workers are denoted by scripts Fand M, respectively. The public care economy and the rest of the market economy are denoted by scripts Hand N. 4. The degree of endogeneity in this version of the model was handled in empirical analysis by using a systems estimation method based on Vector Autoregression (VAR) in Onaran/Oyvat (2022, 2023). 322 European Journal of Economics and Economic Policies: Intervention, Vol. 20 No. 2 © 2023 The Author Journal compilation © 2023 Edward Elgar Publishing Ltd Aggregate output and income (Yt) are equivalent to the sum of the wage income of men, WBM t;and women, WBF t;and profits;Rt: Yt¼WBM tþWBF tþRt(1) The total wage income of women workers is a function of women’s wage rate in the care economy (wHF t), women’s employment in the care economy (EHF tÞ, women’s wage rate in the rest of the economy (wNF tÞand women’s employment in the rest of the economy ðENF tÞ. WBF t¼wHF tEHF tþwNF tENF t(2) Similarly, the total wage income of men workers is a function of men’s wage rates in the care economy (wHM tÞ,men’s employment in the care economy (EHM tÞ, men’s wage rates in the rest of the economy (wNM tÞand men’semploymentintherestoftheeconomy ðENM tÞ. WBM t¼wHM tEHM tþwNM tENM t(3) Gender wage gaps (αN tand αH tÞare the ratios of men’s wage rate to women’s wage rate in each sector. αN t¼wNM t wNF t ;αH t¼wHM t wHF t (4) There are four different types of government spending: (i) current spending in renewable energy, energy efficiency and public transport 5 (GG t); (ii) current spending in the care economy, including spending in education, childcare, healthcare and social care (GH tÞ; (iii) capital spending in infrastructure (public sector gross fixed capital formation (GFCF, IG t); and (iv) other government spending (GC tÞ. Public sector gross fixed capital formation includes capital spending in renewable energy, energy efficiency and public transport as well as buildings for the care economy, for example, hospitals or schools. Government’s expenditure in the care economy constitutes the public care economy output YH t. The rest of the GDP (YN t) is the market output in the rest of economy, which provides the goods and services to meet both the private demand (household consumption, private investment and exports) and government demand for spending in the green economy, other public infrastructure investment (gross fixed capital formation) and other expenditures. Economic activity in the rest of the economy provides the output for both spending in the green economy and the rest of economic activities. The aggregate output in the market economy (GDP, excluding unpaid activities) is the sum of households’expenditure in the care economy (CH t), household consumption in the rest of the economy (CN t), private investment expenditure (It), government’sexpenditure in the care economy, government’s current spending in renewable energy, energy efficiency and public transport, public investment (gross fixed capital formation), government’s other expenditures and net exports of goods and services (Xt−MtÞ. The share of government’s current expenditure in the care economy, in the green economy, other public infrastructure investment and other spending are all determined as a fiscal policy decision as a share of aggregate output. 5. This includes public sector wages, subsidies and procurement. Synthesizing feminist and post-Keynesian/Kaleckian economics for a purple–green–red transition 323 © 2023 The Author Journal compilation © 2023 Edward Elgar Publishing Ltd Yt¼CN tþCH tþItþGH tþGG tþGC tþIG tþXt−Mt(5) YH t¼GH t¼κH tYt(6) YN t¼Yt−GH t¼Ytð1−κH tÞ(7) GG t¼κG tYt(8) GC t¼κC tYt(9) IG t¼κI tYt(10) Employment in the rest of the economy (EN tÞis determined by output and labour productivity in the rest of the economy (and is equal to output divided by productivity, TN t). The share of women in employment in each sector (βN t;βH t) is socially determined by occupational segregation. EN t¼YN t TN t (11) ENF t¼EN tβN t(12) ENM t¼EN tð1−βN tÞ(13) The wage paid to men and women workers in the care economy constitutes the public social expenditure and the care economy is not making profits. Any non-labour inputs used constitute part of other government expenditure. Thus, the public social expenditure is a function of women and men’s wage rate and employment in the care economy (EH tÞ. GH t¼κH tYt¼βH tEH twFH tþð1−βH tÞEH twMH t(14) EH t¼κH tYt wFH tðβH tþαH t−βH tαH tÞ(15) Next, the model introduces the unpaid domestic care labour within the households (UtÞ. For a given demographic structure defining the care needs of a society, higher paid employment by men and women is expected to have some negative impact on the supply of unpaid labour. An increase in government expenditure in the care economy (in education, childcare, health and social care) is also expected to reduce the need in the households for care; therefore, it leads to lower unpaid labour. The impact of employment and public social expenditure on the time spent on unpaid domestic care might be non-linear, and this negative impact might be decreasing in absolute values as it gets increasingly more difficult to decrease unpaid care at lower levels of unpaid care. Unpaid domestic care labour is shared between women and men and is exogenous and institutionally and socially determined. logUt¼q0þqGlogGH tþqFlogENF tþqMlogENM t(16) Profits, that is, the operating surplus in the rest of the economy is income minus wage payments. 324 European Journal of Economics and Economic Policies: Intervention, Vol. 20 No. 2 © 2023 The Author Journal compilation © 2023 Edward Elgar Publishing Ltd has a positive direct impact on productivity, but it also decreases (indirectly) productivity through the reduction in output due to the closing of the gender gap. An economy that is both wage-led and gender equality-led in the medium run is defined as an equality-led demand regime in the medium run (Onaran et al. 2022a, 2023). Fiscal policy on the spending side can include increasing employment in the care or green economy and/or increasing wages in the public sector or buying services from the private sector or giving them subsidies. On the tax side, the model includes taxes on wages, profits, wealth and consumption. 4 LESSONS FROM THE EMPIRICAL FINDINGS OF FEMINIST STRUCTURALIST/POST-KEYNESIAN ANALYSIS This section summarizes the key findings of the empirical analysis based on feminist structuralist/post-Keynesian models. Onaran et al. (2022a, 2023) analyse how a change in hourly wage rates of men and women, gender pay gap, public spending in the care economy versus green/public infrastructure or taxes on wages, profits and wealth have different shortand medium-run impacts on output, productivity, employment of women and men, class distribution of income and wealth and gender gaps using an Instrumental Variable (IV) approach and single equation estimations for behavioural equations. Onaran et al. (2022a) estimate that a one-percentage-point increase in public spending in the care economy as a ratio to GDP in the UK leads in the medium run to a 2.7 per cent increase in GDP, a 3.2 per cent increase in women’s employment and a 0.4 per cent increase in men’s employment, and a one-percentage-point increase in public gross fixed capital formation as a ratio to GDP leads to a 2 per cent increase in GDP, a 1.8 per cent increase in women’s employment and a 1.6 per cent increase in men’s employment. The effects of the spending in the care economy on total employment as well as women’s employment are higher due to the care economy being more labour intensive with a higher share of women. The use of gendered wage and employment data offers a rich set of IVs to tackle endogeneity issues. The results in Onaran et al. (2022a, 2023) show that the positive impact of public social infrastructure investment in the care economy on both output and employment is very high, and despite a strong positive effect on productivity, employment of both men and women increases in the medium run as well. The high effect of public spending in the care economy on productivity in the rest of the economy provides supporting evidence that this spending serves the purpose of infrastructure investment. Empirical research using input–output tables also find that public spending in social care and education have stronger effect on women’saswellasmen’s employment (after accounting for the indirect effects) compared to investment in physical infrastructure (Antonopoulos et al. 2010; İlkkaracan et al. 2015, 2021; İlkkaracan/Kim 2019; De Henau et al. 2016). Onaran/Oyvat (2022, 2023) estimate a reduced form of the model in Section 2 using VAR for eight emerging economies to analyse the impact of public spending in the care economy, the green economy and infrastructure on employment of men and women and GDP. The multiplier effects on GDP are always positive and, in most countries, substantial in all spending categories and reach in the medium run above 1. Amongst the multipliers above 1, for public physical infrastructure (after a one-off increase), the multipliers at the end of five years range between 1.9 in Colombia to 4.6 in South Korea; the multiplier effects of the care spending on GDP in five years range between 1.6 in Turkey and South Africa and 4.5 in South Korea; and the multiplier effects of the public spending in the green economy are between 1.1 in South Korea and 4.5 in Turkey. The differences Synthesizing feminist and post-Keynesian/Kaleckian economics for a purple–green–red transition 331 © 2023 The Author Journal compilation © 2023 Edward Elgar Publishing Ltd across countries indicate that not only the amount but also composition and targeted nature of spending matters in addition to differences in the import dependency or informality. Onaran/Oyvat (2022) also present the effects of a policy mix combining a repeated increase in public spending in the care and green economy, and other physical infrastructure (for example, housing, buildings for schools, hospitals), each by one percentage point as a ratio to GDP every year for five years Onaran et al. (2022a, 2023) analyse the effects of wage increases separately too and find that the UK is both wage-led and gender equality-led, and hence equality-led; that is, an upward convergence in wages –increasing wages with closing gender pay gap in both the care economy and the rest of the economy – leadstohigheroutputinboththeshortand the medium run. However, the positive impact on productivity is stronger in the medium run than on output, which leads to a fall in employment of both men and women. A policy mix of upward convergence in wages and public investment in both the care economy and green/public infrastructure leads to a much higher increase in output, and the employment of both men and women as well as private investment increase both in the short and the medium run (Onaran et al. 2023). Hence, achieving both higher wages, gender equality and employment for both men and women requires a stimulus to demand in the form of higher public spending in both the care economy, the green economy and public infrastructure along with an upward convergence in wages. However, public debt/ GDP increases marginally in the medium run in this policy mix, and an increase in tax rates is required to improve public debt/GDP. On taxation, an increase in the progressivity of income taxation in the form of increasing the tax rate on capital income and decreasing the tax rate on labour income increases output and men’s and women’s employment and decreases public debt/GDP in both the short and the medium run (Onaran et al. 2023). An increase in the tax rate on wealth decreases wealth concentration and has a positive and the strongest impact on output, employment and the budget (Onaran et al. 2023). There are two reasons why taxes on profit income and wealth are more effective. Firstly, UK is a wage-led economy, and the negative impact of taxes on profits and wealth on household consumption is significantly smaller than the negative impact of tax on labour. Secondly, a higher tax rate on wealth leads to a decline in wealth inequality which leads to higher private investment, reflecting the positive effects of lower market concentration, reduced barriers to entry and lower degree of financialization of non-financial companies. This inclusion of wealth inequality and wealth taxes in Onaran et al. (2023) is crucial to show the size of the fiscal space to simultaneously address the need for public care infrastructure investment and green physical infrastructure investment and to overcome false dichotomies. 5 CONCLUSIONS One policy lesson stands out among all the empirical findings based on the synthesis of feminist structuralist/post-Keynesian models discussed in this paper: public spending in the care economy, green economy and other infrastructure is the key to a green, purple 10 and red new deal for a caring just transition to a zero-carbon economy. A paradigm shift to a needs-based approach to fiscal policy is required to tackle inequalities and social, economic and ecological crises. A related important finding is that the multiplier effects of public spending are much larger thanthe effectsthrough wage increases even if the economy is wage-led. Wage increases create 10. The care economy also labelled as the ‘purple’economy by İlkkaracan (2013). 332 European Journal of Economics and Economic Policies: Intervention, Vol. 20 No. 2 © 2023 The Author Journal compilation © 2023 Edward Elgar Publishing Ltd a small positive stimulus to demand in a wage-led economy but the effects on productivity are much larger, leading to negative employment in the medium run. Fiscal expansion should accompany wage-led development policies such as minimum wagepolicies in order to achieve full employment. During 2017–2020, the progressive South Korean presidency faced this problem, trying to implement a paradigm shift towards an equality-led development policy while being restrained in fiscal expansion surrounded by a fiscally conservative environment. The bottom line is that full employment requires demand policies to accompany labour market and wage policies. A needs-based policy departs from the social and environmental requirements in different spending areas rather than pre-determined budget constraints to ensure that both the ecological transition and care needs of the countries are adequately addressed and a green transition is gender-equitable. The green economy, the care economy and other public infrastructure has the potential to create a large number of new jobs in socially much needed areas for redeployment from the fossil fuel-based sectors. The care economy is itself a low-carbon, highly labour-intensive sector (Onaran/Oyvat 2023). However, starting with high gender gaps in employment and the very high investment needs in the green economy, even a policy mix including investing in the care economy runs the danger of creating more jobs for men than for women if the current occupational segregation patterns do not evolve. This can be overcome by hiring and training policies for gender mainstreaming of the new green and physical infrastructure jobs. There will be two important constraints to the implementation of this green, purple, red new deal: the balance-of-payments constraint and the public debt constraint. On the former, the transition to renewable energy, food sovereignty and circular economy may, in the medium run, relax the balance-of-payments constraints by substituting imported energy and food. In the short run, international policy coordination for green investment, 11 technology transfer going beyond intellectual property rights, capital and current account controls, development aid and cancellation or restructuring of the debt of the developing countries are urgently required to tackle climate change in the context of global climate justice. On the borrowing constraint, we need to be clear that while multiplier effects of the care and green investment are big, they are not big enough to fund all of the public spending. In September 2022, the very British right-wing version of the deficit spending implementation by the Conservative Party, cutting taxes on the rich while not cutting spending and increasing borrowing requirement, showed all too clearly that there are limits to public borrowing in the presence of global currency hierarchies, even in a G7 economy with sovereign currency. Public borrowing to invest in both the green and care economy can be justified, given their medium-term effects on productivity and sustainability, and is necessary in the short run, given the time lags required for tax legislation. 12 11. The effects of public spending are stronger and negative effects on the current account balance are moderated, if policies are implemented simultaneously in all the countries (Onaran 2016b; Obst et al. 2020). 12. Day-to-day spending in these sectors –for example, wages of teachers, nurses or social care workers –is considered as current spending, thus not as investment, in our national accounts; however, public spending in the care economy has long-term benefits to the society as a whole, with substantial productivity impact in all other sectors of the economy by increasing the skills, health and innovative capacity of people (Elson 2016, 2017). Synthesizing feminist and post-Keynesian/Kaleckian economics for a purple–green–red transition 333 © 2023 The Author Journal compilation © 2023 Edward Elgar Publishing Ltd However, the scale and urgency of the social and ecological needs require a substantial rise in the tax rates. In particular, the wealth of the top 1 per cent offers a so far untapped resource. Our synthesis model is particularly important in this respect, showing that taxation of wealth is a very effective policy to fund purple and green public spending, while tackling income, gender and wealth inequalities. Tippet et al. (2021) presents the tax revenue potential of a progressive scheme of wealth taxation, aiming at the top 1 per cent of the wealthiest households in the UK with the potential to create new tax revenues equivalent to more than 15 per cent of the current level of tax revenues. These policies should be implemented with further increase in the degree of progressivity of income tax and corporate tax. Monetary policy should accommodate fiscal policies contributing to the funding of long-term public investment in the care and green economy. The central banks’mandate should include a dual target of full/high employment and an inflation target high enough to be consistent with the former, moving within a band, with a higher weight for employment. Furthermore, supporting the transition to net zero can be integrated to the secondary mandate of central banks (see Dafermos et al. 2022b). National and regional investment banks working in cooperation with the government and central bank are also crucial for funding large-scale public infrastructure projects. The coordination of fiscal policies with pro-labour institutions makes the effects of fiscal spending stronger and eases the funding pressures as higher wages lead to higher tax revenues (Onaran 2016b; Obst et al. 2020; Onaran et al. 2023). Finally, a policy we have not discussed in this paper in terms of the policy implications of a synthesis model of feminist and post-Keynesian economics is the shortening of the working week. 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