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 develop and estimate a quantitative life-cycle model featuring a dynamic feedback loop between fertility and bargaining power: childbirth lowers women's wages and outside options, weakening their bargaining position within the household and further constraining their autonomy over future fertility decisions. These bargaining concerns are quantitatively important in depressing marriage incentives, generating inefficient divorce, and consequently lower fertility at the household level. Exploiting the relaxation of the One-Child Policy in China, I show that couples with misaligned fertility preferences exhibit smaller fertility responses and higher divorce rates than couples with aligned preferences. The estimated model further indicates that such couples are less likely to form marriages and tend to marry at later ages. Removing bargaining frictions encourages earlier childbearing, increases completed fertility, and strengthens fertility response to family policies.