Evidence of shifts in intra-household allocation under exogenous changes in family policy and administrative procedures: The case of school enrollment in Chile

In recent times, economists have argued the unitary model of household utility, which assumes households maximize a single utility function over one household budget constraint, does not accurately describe the economic behavior of households (Chiappori et al. 1993, Alderman et al. 1995, Rosenzweig & Stark 1997, Gray 1998). Some have found empirical evidence rejecting this model (Fortin & Lacroix 1997, Browing & Chiappori 1998, Rangel 2006). Instead, they argue, models should acknowledge the bargaining power of individuals to determine a household’s utility or preferences. This study examines the effects of exogenous changes in family policy and administrative processes on one household consumption variable, children’s education. Specifically, the legalization of divorce and family court wait times for divorce are analyzed. Using panel data and a difference-in-difference approach, I show that implementing pro-female divorce legislation shifts the bargaining power within married couple households, as does the speed with which family courts process divorce cases. Both pro-female divorce legislation and quick turn-around times for processing a divorce lead to an increase in school enrollment for children of married couples.

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Replaced with revised version of paper 07/31/09.
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