Abstract

This paper tests the impact on intra-household bargaining of property rights in microenterprises. I use a randomized field experiment on firm formalization in Benin as exogenous source of variation in property rights within the household. Entrepreneurs (both women and men) who become formal gain more control over household revenue, consistent with higher bargaining power. Women entrepreneurs also invest more in their business and are much more likely to pay to hide a windfall transfer from their spouse, a measure of the intra-household constraint elicited in a lab-in-the-field experiment. In contrast, formalization lowers the intra-household constraint for male entrepreneurs, likely because it enables them to separate household and business resources. These gender differential effects are consistent with a bargaining model in which women entrepreneurs, but not men, are constrained by their spouse in their investment decisions.