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Poverty Traps Driven by Family Bargaining

Author

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  • Yotaro Ueno

    (Graduate School of Economics, Kyoto University and Junior Research Fellow, Research Institute for Economics & Business Administration (RIEB), Kobe University, JAPAN)

Abstract

Poverty traps arise when households remain poor due to insufficient capital assets. While traditional mechanisms emphasize occupational choices, re-analysis of Balboni, Bandiera, Burgess, Ghatak and Heil (2022b) suggests that long-run divergence in household capital may be more closely linked to wives' empowerment. To explore this, I develop a dynamic collective household model incorporating intra-household bargaining, where decisions on capital investment and labor allocation are influenced by husbands' conservative social preferences. This framework demonstrates the existence of interpretable multiple steady states that differ in household capital accumulation and wives' labor supply, even in the absence of market frictions. Empirical data validate a distinctive feature of the model: increases in household capital are proportionally linked to increases in women's labor supply. These findings suggest that women's empowerment can effectively complement "big push" policies aimed at poverty reduction.

Suggested Citation

  • Yotaro Ueno, 2025. "Poverty Traps Driven by Family Bargaining," Discussion Paper Series DP2025-17, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2025-17
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2025-17.pdf
    File Function: First version, 2024
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    More about this item

    Keywords

    Poverty traps; Intra-household bargaining;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • D10 - Microeconomics - - Household Behavior - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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