Family economy

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The term Family Economy can be used to describe the family as an economic unit. The early stages of development in many economies are characterized by family based production.[1]

In the early, pre-industrial stage, technology was limited and unchanging. Most economic activity took place within the household, and production and distribution were organized by custom and tradition.[2] High mortality rates and low productivity meant that on the farms and in the towns life was short and living conditions were harsh – an existence which was accepted fatalistically. In this society the family played a central role, since economic and social status was defined by birth, family ties, and local custom. Most importantly, the family was a productive unit, and physical strength – typically a male attribute – was an essential element in survival.[1]

The family economic unit has always been dependent on specialized labor done by family members. The family was a multi-generational producer with capital and land provided by older generations and labor provided by younger generations. Goods were produced not only for home consumption but to sell and trade in the market as well. Family production was not only limited to agricultural products but they also produced manufacturing goods and provided services.[3]

In order to sustain a viable family economy during the pre-industrial era labor was needed. The labor needed to operate the farm and provide old-age support came from family members, fertility was high. High fertility and guaranteed employment on the family farm made education, beyond the basic literacy needed to read the bible, expensive and unnecessary.[4]

During the post industrial stage the family as an economic unit changed.The family transformed from being a unit of production to being a unit of consumption. This new era of industrialization brought changes where farming can be done with less persons, therefore children were no longer to be viewed as economic assets but rather as liabilities. Industrialization further contributed to the demise of the family economy where the capitalist market encouraged production in large scale factories, farms and mines. Wage labor became common and family members no longer worked together but rather used the wages they had earned to buy goods which they consumed as a family unit.[5] The industrial revolution, starting in the nineteenth and going into the twentieth century, is seen as the force that changed the economic family and is basically responsible for the "modern family."

Further reading[edit]

Nussbaum, M. (2000) Women and Development: The Capabilities Approach, Cambridge University Press, New York.

Paarlberg, Don. "The Future of the Family Farm." The Saturday Evening Post. March 1976, pp. 42–43.


  1. ^ a b Parente, S.L., Rogerson, R. & Wright, R., (2000). Homework in Development Economics: Household Production and the Wealth of Nations. Journal of Political Economy, 108, 680-687.
  2. ^ Ross, H. L. , Sawhill, I.V.(1977).The Family as an Economic Unit. The Wilson Quarterly,1,2.Retrieved from:
  3. ^ Sellers, C.(1991). The Market Revolution: Jacksonian America, 1815-1846 Oxford University Press, New York.
  4. ^ Carter, S.B., Ransom, R.L., & Sutch, R.(2003). Family Matters: The Life-Cycle Transition and the Unparalleled Fertility Decline in Antebellum America. In Craig, L.(Ed.), To Sow One Acre More(pp. 107-113)Johns Hopkins University Press, Baltimore
  5. ^ Ruggles, S. (2001). Living Arrangements and the Well-being of Older Persons in the Past, Population Bulletin of the United Nations, 42/43, 111-161