Gender Discrimination and Efficiency in Marriage: the Bargaining Family under Scrutiny

This paper criticizes the view that discrimination limits the disadvantaged sex to undertaking housework and thus ensures that gains from specialization at the household level are not wasted. Our framework gives attention to causal links between labor market discrimination and the strategic behavior of women and men within families. We consider a repeated family bargaining model that links the topics of employment and households. A key aspect of the model is that marital bargaining power is determined endogenously: the amount of money a person earns—in comparison with a partner’s income— establishes relative marital bargaining power. Gender discrimination can alter household behavior in surprising and sometimes unfortunate ways. We show that: (i) the efficiency of household decisions is sometimes inversely related to the prevailing degree of gender discrimination in labor markets; (ii) discriminated against females have difficulty enforcing cooperative household outcomes since they may be extremely limited to credibly punish opportunistic behavior by their male partners; (iii) the likelihood that sharing rules such as “equal sharing” are maintained throughout a marriage relationship is highest when men and women face equal opportunities in labor markets. A key policy implication obtained from our analysis is that efforts to promote greater gender equality in labor markets can also contribute to increasing the likelihood of fully cooperative outcomes at the household level.