Childbirth and Welfare Inequality: The Role of Bargaining Power and Intrahousehold Allocation

Speaker: Dr Naijia Guo

Affiliation: Hong Kong University

Zoom: https://uqz.zoom.us/j/82603079317

Abstract: This paper investigates the impact of childbirth on wives’ bargaining power and wel-fare by analyzing labor market responses and adjustments in intrahousehold resource al-location. Using data from the Japanese Panel Survey of Consumers (1993–2020) and em-ploying an event study approach, we find that wives, relative 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 spouses. Our analysis reveals that the wife’s bargaining power declines by 34.3% after childbirth, while both spouses’ preferences for public goods increase. As a result, 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 bar-gaining power had remained unaffected by childbirth, 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