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Family Bargaining and Welfare

  • Luis Rubalcava
  • Duncan Thomas

Recent research on household behavior suggests that, ceteris paribus, a woman's "power" within a household influences consumption and time allocation choices. From an empirical point of view, a central stumbling block in this line of inquiry has been identification of sources of "power" that can plausibly be treated as exogenous. Aid to Families with Dependent Children, AFDC, was paid only to single women with children. The benefit level provides a natural fall-back for a low-income woman with children who is contemplating separation from her partner. As AFDC payments increase, separation will become more attractive and, the authors conjecture, the relative bargaining power of the woman in a household should also increase. If this is true, and if bargaining power does affect allocation decisions within the household, then the AFDC benefit level should affect household choices in intact families. This hypothesis is tested using the Panel Study of Income Data from 1968 through 1992.

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Paper provided by RAND Corporation Publications Department in its series Working Papers with number 00-10.

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Length: 36 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:ran:wpaper:00-10
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