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Determinants and Consequences of Bargaining Power in Households

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  • Leora Friedberg
  • Anthony Webb

    ()
    (Center for Retirement Research, Boston College)

Abstract

A growing literature offers indirect evidence that the distribution of bargaining power within a household influences decisions made by the household. These results undermine the notion that a household can be treated as a "unitary" decision maker. The indirect evidence links household outcomes to variables that are assumed to influence the distribution of bargaining power within the household. In this paper, we have data on whether a husband or wife in the Health and Retirement Study "has the final say" when making major decisions in a household. We use this variable to analyze determinants and some consequences of bargaining power. Our analysis overcomes endogeneity problems arising in many earlier studies and constitutes the missing link confirming the importance of household bargaining models. We find that decision-making power depends on plausible variables within the household and also influences important household outcomes, and moreover that the second set of results is much stronger than the first set. While current and lifetime earnings significantly affect decision-making power, the effects are moderate. On the other hand, decision-making power has important effects on financial decisions like stock market investment and total wealth accumulation and may help explain, for example, the relatively high poverty rate among widows. Thus, our results suggest that more research into the determination of bargaining power is needed, and that household bargaining has major effects on the welfare of household members.

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Bibliographic Info

Paper provided by Center for Retirement Research in its series Working Papers, Center for Retirement Research at Boston College with number wp2006-13.

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Length: 36 pages
Date of creation: Jun 2006
Date of revision: Jun 2006
Handle: RePEc:crr:crrwps:wp2006-13

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Keywords: bargaining power; households; decision-making power;

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References

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  1. Thomas, D., 1989. "Intra-Household Resource Allocation: An Inferential Approach," Papers 586, Yale - Economic Growth Center.
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Citations

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Cited by:
  1. Melanie Lührmann & Jürgen Maurer, 2008. "Who wears the trousers? A semiparametric analysis of decision power in couples," MEA discussion paper series 08168, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  2. Graziella Bertocchi & Marianna Brunetti & Costanza Torricelli, 2012. "Is it money or brains? The determinants of intra-family decision power," Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) 12062, Universita di Modena e Reggio Emilia, Facoltà di Economia "Marco Biagi".
  3. Alesina, Alberto F & Ichino, Andrea & Karabarbounis, Loukas, 2007. "Gender Based Taxation and the Division of Family Chores," CEPR Discussion Papers 6591, C.E.P.R. Discussion Papers.
  4. Lépine, Aurélia & Strobl, Eric, 2013. "The Effect of Women’s Bargaining Power on Child Nutrition in Rural Senegal," World Development, Elsevier, vol. 45(C), pages 17-30.
  5. Thomas BAUDIN & David de la CROIX & Paula GOBBI, 2012. "DINKs, DEWKs & Co. Marriage, Fertility and Childlessness in the United States," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2012013, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  6. Estelle James & Alejandra Cox Edwards & Rebeca Wong, 2012. "The Gender Impact of Pension Reform," World Bank Other Operational Studies 13046, The World Bank.
  7. Sylvia Brandt & Peter Marie, 2011. "Racial Disparities in Hospital Length of Stay for Asthma: Implications for Economic Policies," Journal of Family and Economic Issues, Springer, vol. 32(1), pages 152-169, March.
  8. Majlesi, Kaveh, 2014. "Labor Market Opportunities and Women's Decision Making Power within Households," Working Papers 2014:4, Lund University, Department of Economics.
  9. Pamela Giustinelli, 2011. "Group Decision Making with Uncertain Outcomes: Unpacking Child-Parent Choices of High School Tracks," Working Papers 2011-030, Human Capital and Economic Opportunity Working Group.
  10. Mabsout, Ramzi & van Staveren, Irene, 2010. "Disentangling Bargaining Power from Individual and Household Level to Institutions: Evidence on Women's Position in Ethiopia," World Development, Elsevier, vol. 38(5), pages 783-796, May.
  11. Hou, Xiaohui, 2011. "Women's decision making power and human development : evidence from Pakistan," Policy Research Working Paper Series 5830, The World Bank.
  12. Julie L. Hotchkiss & Robert E. Moore, 2007. "Assessing the welfare impact of the 2001 tax reform on dual-earner families," Working Paper 2007-27, Federal Reserve Bank of Atlanta.

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