Estimating the Endogenously Determined Intrahousehold Balance of Power and its Impact on Expenditure Pattern: Evidence from Nepal

Abstract

The collective approach to household behavior relaxes the restrictive features of the unitary model by specifying household welfare as a weighted combination of the individuals' utilities. But the weights are assumed fixed or exogenous to the analysis. Koolwal and Ray extend the collective approach by proposing and estimating a framework where the weights are determined and simultaneously estimated with the household outcomes. The authors present Nepalese evidence that suggests that a woman's share of household earnings understates her "power" in making household decisions. An increase in the woman's educational experience leads to a rise in her bargaining power. The results also reveal some interesting nonmonotonic relationships between a woman's "power" and the household's expenditure outcomes.

This paper - a product of the Office of the Senior Vice President, Development Economics - is part of a larger effort in the Bank to understand how gender affects development outcomes and to identify the causes of poverty.

Keywords: Unitary Model, Collective Approach, Female Power

JEL Classification: C300, D100, D120, D190