The Role of Labor Market Participation on Marriage Bargaining – Identification through Intergenerational Transfers

This paper provides insights into the determinants of marriage bargaining by analyzing withincouple negotiation for the share of family resources allocated to each of the spouse’s old-age parents. The focal question is the extent to which spousal labor market participation affects her bargaining power. The study is based on a unique Chinese household level survey data. To account for the potential endogeneity of one’s labor market participation, the analysis exploits the exogenous variations in working-age individuals’ employment status resulting from the privatization of state-owned enterprises (SOEs) in China during the mid to late 1990’s. After controlling for a number of household and individual characteristics (such as elderly needs and living arrangements), the share of transfers towards a spouse’s own parents is found to be positively correlated with her employment status and work hours. The findings support the notion that a spouse’s labor market participation has a non-negligible impact on her bargaining power in the marriage. JEL Classification Codes: J12, J14.