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Fertility and endogenous gender bargaining power

Abstract

We develop an intra-household bargaining model to examine the feedback effect of household fertility decisions on gender bargaining power. In our model, the household balance of power is endogenously determined reflecting social interactions, i.e., the fertility choices by the other couples in society. We show the presence of multiple equilibria in fertility outcome: one equilibrium characterized by patriarchal society with a high fertility rate, and another in which women are sufficiently empowered and the fertility rate is low. In other circumstances, this study also demonstrates a positive relationship between female wage rates and the fertility outcomes. Finally, we discuss its policy implications, comparing the effects of two family policies: the child allowance and the subsidies for market childcare.

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Notes

  1. For fertility bargaining with exogenous bargaining power, see, for example, Lehrer (1996) and Eswaran (2002).

  2. Their specification of bargaining power relates to the traditional analysis of family bargaining where the bargaining positions are determined by individuals’ outside option in the case of breakdown in their negotiations. For an excellent survey on family bargaining, see Lundberg and Pollak (1996).

  3. The author thanks an anonymous referee for his/her introduction of the literature.

  4. Cigno (2012) showed that marital institution affects the couple’s choice whether to behave noncooperatively or cooperatively by specializing in either childcare or market work. Rasul (2008) also investigated the limited commitment problem of household and demonstrated that the absence of binding contract leads to inefficient fertility outcomes. In his study, however, since the women’s position is not characterized by her earnings, the negative effect of children on women’s labor supply is not explicitly considered.

  5. In both theoretical and empirical studies, many authors have shown that most societies have traditionally incorporated fertility trends into their gender role norms and that these norms may damage women’s economic position (Folbre 1997; Fernandez et al. 2004; Munshi and Myaux 2006; Feyrer et al. 2008).

  6. Many other existing evidences confirmed the heterogeneity in parental preferences of fertility outcomes (Mason and Taj 1987; Ngom 1997; Voas 2003). The family bargaining on fertility under these conflicting parental preferences is also observed in both developed and developing countries. Rasul (2008) found fertility bargaining using Malay and Malaysian Chinese micro-data while Hener (2010) confirmed that of German households.

  7. Breakdown of negotiations due to heterogeneous preferences are beyond our scope. As an explanation of this breakdown, Manser and Brown (1980) and McElroy and Horney (1981) translated the threat-point in Nash bargaining as divorce. For the intra-family bargaining analysis with the threat-point of noncooperative outcome, see Lundberg and Pollak (1993).

  8. See, for example, Mincer (1963) and Butz and Ward (1979).

  9. The relationship between fertility and female wage rates seems to be still empirically controversial (Andersson 2000; Hoem 2000; Engelhardt et al. 2004; Vikat 2004).

  10. The positive effect engendered by a reduction in the relative price of bought-in childcare is argued by Ermisch (1989) and Ahn and Mira (2002).

  11. Individual’s additional utility from the number of their children, v i (n), may differ between men and women taking into account the biological difference such as the women’s time devoted to pregnancy, giving birth, and the social norms or culture that impose on them other particular roles regarding childrearing.

  12. This assumption is justified if Y > w under the model in which mother and father’s time for childcare are perfect substitution and family members can choose their time allocation between labor supply and childcare. However, under Y > w and as long as women’s time and men’s time are substitutable, even if we ease the assumption of perfect substitution, the main results of this paper are unaffected. From the fact that there is no country where the average female wage rate is as high as the average male wage rate even in OECD countries, we can assume women’s lower opportunity cost of their time than that of men (OECD Employment Outlook 2010).

  13. Specific examples are the perinatal and lactation period.

  14. Because the scale effect in childcare is sensitive to the timing of birth, Cigno and Pettini (2002) assume the possible situation in which the negative and positive effects offset each other so that they can simply assume constant returns to scale in production of childcare. This assumption is also employed in the analysis of family policies such as in Apps and Rees (2004).

  15. The idea of the Pareto weights within a household was introduced by the studies on the collective model of Chiappori (1988, 1992). According to his studies, the distributional rule is affected by exogenous variables such as wages and marital institutions. The recent study of Basu (2006) succeeded in endogenizing the distributional rule, taking account of the feedback effect of household choices themselves on the power balance in the household. The effect of fertility choice, however, is not considered in his analysis. The fact that an increase in the wife’s income relative to her husband’s brings her more autonomy in household decision making is also supported in many empirical studies such as those of Browning et al. (1994), Hoddinott and Haddad (1995), and Lundberg et al. (1997). Zamora (2011) suggested that fertility choice affects the distributional rule, showing that the choice of female labor participation has a significant effect on the rule. Moreover, relative earning is also one of the components in the indicator of the degree of women’s economic autonomy used by the international institutions (e.g., gender empowerment measures in Human Development Report (UNDP 2007)).

  16. Feyrer et al. (2008) pointed out that women’s status is affected not only by the common economic factors but also by the longstanding cultural and social ones. Regarding the point of the social factor in gender bargaining power, we assume that peer pressure reflecting the relevant norms shapes the behaviors of future parents. The empirical works such as those of Goldstein et al. (2003), Lutz et al. (2006), and Testa and Grilli (2006) showed the significant correlation between the actual fertility outcome and the young generations’ standards relating parental attitude.

  17. See for example, Lundberg and Pollak (1993).

  18. The classification into these two cases is reasonable from the empirical point of view since they are observed in both developed and developing countries. For example, Mason and Taj (1987) surveyed the existing empirical evidences of developing countries including the both cases and concluded that, on average, men’s demands for children are likely to be larger than those of their wives. We also examined the case of a = 1, the conventional common preference model, as a benchmark case in the previous version of this paper so as to show the well-known positive effect of a reduction in the price of bought-in childcare on fertility outcomes.

  19. Ngom (1997) found evidence that men desire to have more children than women do in Ghana and Kenya. According to Westoff’s (2010) studies on ideal family sizes in developing countries, men report a larger ideal number of children on average in 32 out of 33 countries. As Fig. 1 indicates, this trend in reproductive preferences can also be seen in developed countries (Testa 2006). Based on these facts, Maitra (2004) has formulated a model in which women are more likely to bear the cost of having children.

  20. The possible interpretation of the bargaining power function in Fig. 2b is as follows. If other couples have a single child on average, it reduces the wife’s time in market work. A young couple then anticipates that the wife would spend as much time for childcare as other wives do and, thus, women’s less expected labor income. Consequently, it leads to the lower bargaining power of young women, though its decline is relatively small. Once the other couples have more than a certain number of children, however, the young couple expects that much of the wife’s time will be occupied by childcare. As a result, the wife’s bargaining power drastically decreases. After this sharp decline in her power, the wife finally gives up the whole power within her households moderately because of other couples’ fertility choices. In this situation, the multiple equilibria in Fig. 2b are likely to emerge in the economy.

  21. In the analysis of Iyigun and Walsh (2007), the woman’s strategic behavior of educational investment improves her utility in the case of a breakdown in the marital agreement, i.e., their bargaining power, and this behavior induces a declining fertility rate because of the higher opportunity cost of having and rearing children.

  22. High fertility may reinforce the husband’s loyalty and economic support to the wife, who will then be more likely to avoid divorce and abandonment by her husband (Mernissi 1975). Furthermore, in some societies, women’s own value may be heightened by bearing numerous children (Blake 1965). These could be among the factors causing women to prefer a greater number of children. Similar relationships between parental preferences are also found in developed countries (Thomson et al. 1990; Testa 2006).

  23. Since \({\partial \psi \left( {n;w,Y,g_S } \right)} / {\partial g_S }=-{\theta^ \prime wn} / Y\cdot {\partial \widetilde{t}} / {\partial g_S }\), \({\partial \widetilde{t}} / {\partial g_S <0}\) gives \({\partial \psi } / {\partial g_S }>0\).

  24. According to World Bank data (2012), TFR of year 2010 also indicate more than 1.75 in some of the countries where women prefer a larger family size than men in Fig. 1 (Belgium, Denmark, Finland, France, Ireland, The Netherlands, Sweden).

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Acknowledgements

I would like to thank the editor, Alessandro Cigno, and two referees of this journal for their detailed and constructive comments. I am also grateful to Hikaru Ogawa, Takanori Adachi, Makoto Hirazawa, Kazutoshi Miyazawa, Emiko Usui, Akira Yakita, and the participants of the 14th Labor Economics Conference and the workshop held at Nagoya University.

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Correspondence to Mizuki Komura.

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Responsible editor: Alessandro Cigno

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Komura, M. Fertility and endogenous gender bargaining power. J Popul Econ 26, 943–961 (2013). https://doi.org/10.1007/s00148-012-0460-6

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Keywords

  • Endogenous intra-household bargaining power
  • Fertility
  • Female labor supply
  • Child support