Does it matter who makes the money? An empirical analysis of women’s bargaining power and child outcomes in Indonesia

Abstract: Could an even larger push for women empowerment be a viable development strategy for developing countries? A large literature relates the bargaining power of women to improved health and education of their children (Majlesi, 2015; Qian, 2008; Bobonis, 2009; Duflo, 2003; Lundberg, Pollak and Wales, 1997). However, it remains a challenge to find a good proxy for bargaining power that truly reflects the decision-making power of the mother in the household. This thesis aims to contribute to the literature by using women's earnings, relative to that of their husband, as a proxy for bargaining power and tracking whether decisions made in the household change hands as the income of the mother rises. Using two waves of panel data from the Indonesian Family Life Survey and a fixed effects methodology, this thesis finds that women's bargaining power has a significant effect on children's health, but not on education. Mothers with a relatively high income display stronger effects for girls, while mothers with a comparatively low income prefer to invest in the health of sons. Curiously, as the income of the mother rises, her decision-making power over education increases while her influence over child health does not change significantly.