Research

This paper investigates the impact of childbirth on wives’ bargaining power and welfare by examining labor market responses and adjustments in intrahousehold resource allocation. Using data from the Japanese Panel Survey of Consumers (1993--2020) and employing an event study approach, we find that wives, compared to their husbands, experience a 34.9% decrease in private consumption and a 7.5% decrease in leisure following the birth of the first child. We develop a collective bargaining framework to estimate the effects of parenthood on bargaining power, preferences for consumption and leisure, and productivity in producing public goods for both wives and husbands. The wife’s bargaining power declines by 34.3% after childbirth, while both spouses’ preferences for public goods increase. Consequently, the arrival of a child leads to a 12.2% decline in welfare for wives but a 7.0% increase for husbands. Our counterfactual analysis indicates that if a wife’s bargaining power had remained unaffected by fertility or wage effects, her welfare would have increased by 2.6 percentage points compared to the baseline. Furthermore, if there had been no wage penalties imposed on the wife, her welfare would have increased by 7.8 percentage points.

This paper studies the role of intrahousehold bargaining in shaping women's fertility decisions over the life cycle. I build and estimate a quantitative life-cycle model in which fertility is jointly determined by female labor supply and women's bargaining power within the household under limited commitment, with endogenous marriage and divorce. A central feature of the model is a dynamic feedback loop: childbirth lowers women's wages and outside options, weakening their bargaining position and feeding back into subsequent fertility decisions. Exploiting the relaxation of fertility restrictions in China, I document empirically that couples with misaligned fertility preferences exhibit significantly smaller fertility responses and higher divorce rates than couples with aligned preferences. The estimated model replicates these reduced-form moments and further reveals the quantitative importance of limited-commitment frictions in depressing marriage incentives, generating inefficient divorce, and thereby suppressing fertility rates. Eliminating them raises completed fertility by 1.77% and marriage rates by 4.48%. Finally, the effectiveness of family policies depends critically on the degree of commitment within the household.