Alimony Rights and Intrahousehold Allocation of Resources: Evidence from Brazil
Household economic theory has largely relied on the concept of a "unitary" family decision-making model, in which the household can be considered the appropriate unit of decision-making. Exploiting an exogenous extension of alimony rights to cohabiting couples in Brazil, this paper presents robust empirical evidence challenging this assumption. Alimony rights improve women’s outside options, strengthen their negotiating positions, and increase their influence over the allocation of resources within intact partnerships. Econometric results corroborate this reasoning and indicate that more decision power in the hands of women affects both the hours worked by female adults and the pattern of investments in the human capital of children. These findings suggest that models of the family should take intrahousehold heterogeneity in preferences into account.
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