Intrahousehold Allocation and Bargaining Power: Evidence from Chile

Abstract

Until 1999 children born out of wedlock in Chile had di§erent child support rights to those born to married couples. I interpret this law change as an increase in bargaining power of woman in cohabiting relationships. Using a panel of cross sectional data I Önd a decrease of 1 percentage point in the probability of working for men, and an increase of 2 percentage points in school attendance of children between 14 and 18 and boys between 0 and 5 years old. These results provide evidence against the unitary model as well as against the Nash bargaining model. The labor market outcomes support a model where the reduction in menís relative bargaining power is understood as a tax on wages: there is a proportion of income that is not allocated according to the money earnerís preferences