Labor Market Opportunities and Women’s Decision Making Power within Households

Despite the perceived importance of labor market opportunities in shaping married women’s outside option, and their bargaining power within households as a result, this link has received very little empirical attention. Using longitudinal data on who makes the decision on a wide range of issues within Mexican households and data from the administrative records of the Mexican Social Security Institute, this paper identifies the effects of relative changes in labor market opportunities for men and women on both working and non-working women’s decision making power. I find that increases in labor market opportunities improve women’s decision-making power as well as children’s health. Using differential labor demand shocks across Mexican industries caused by China’s admission to the WTO gives similar results.