Working Paper No. 02-03

Endogenous Gender Power, Household Labor Supply and the Quantity-Quality Tradeoff
Murat F. Iyigun and Randall P. Walsh
July 2002

ABSTRACT

We present a microeconomic model of the household under which there exists no difference in spousal preferences but where childrearing is more time costly for women. Bargaining between the wife and the husband forms the basis of household decisions. Marital bargaining power is determined endogenously according to the relative labor income of the spouses. The endogeneity of bargaining power introduces a non-cooperative element to the couples' decision-making problem because both the husband and the wife take into account how their labor supply decisions affect their marital power and the share they extract from the household resources. Under the model, changes in marital gender power influence the quantity-quality tradeoff because the intra-household transfers of leisure affect the marital balance of power. Our model shows that empowering women through institutional reforms leads to lower fertility and higher educational attainment. Improvements in life expectancy and a lower gender wage gap are also shown to empower women and divert household resources to education.

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