Bargaining to work: the effect of female autonomy on female labour supply

Author(s): ChloƩ van Biljon Dieter von Fintel , Atika Pasha

Stellenbosch Working Paper Series No. WP04/2018

Publication date: March 2018

Abstract:
Female labour supply is an important outcome for measuring gender equality and is therefore regarded as one of the key indicators for women’s empowerment. The empowerment of women through greater labour force participation is well documented in the literature. We argue, however, that the relationship between female labour force participation and empowerment is endogenous. We instead turn our attention to understanding whether greater female household autonomy causes participation in the labour market in the first place. Using the roll out of banking cards associated with the South African government cash transfers as an exogenous shock, we show that financial inclusion improves women’s decision making power in the household. In response to this redistribution of bargaining power in the household, we provide evidence of increased female labour force participation. Our results show that becoming a primary decision maker leads to a 92 percentage point increase in the probability that women participate in the labour market.

JEL Classification:
C36, C78, D13, J16, J22

Keywords:
Female labour force participation, SASSA cards, female autonomy, non-cooperative household bargaining model, South Africa, NIDS

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