Married women’s labor force participation and intra-household bargaining power

Abstract

I examine the effects of education on the labor force participation (LFP) of married women in an intra-household collective decision framework with imperfectly transferable utility and endogenous bargaining powers. In this case, individuals’ pre-marriage choices, including educational choices and matching on the marriage market, determine their bargaining power. Education has thus monetary (in the marriage and labor markets) and non-monetary (as a normal good) types of return. The estimated model exhibits the features that are consistent with the data. First, the female’s bargaining power increases when a woman is more educated relative to her spouse. Second, women’s LFP is an inverse U-shaped function of bargaining power. As a woman’s bargaining power increases, she participates more in the labor market. However, over a certain level of bargaining power, women are less likely to work outside the home. Thus, this paper identifies a new channel through which education can affect LFP.