Marriage is also about bargaining power – 02/20/2024 – Lorena Hakak

Economics is a much broader science than it seems at first glance. Economists, greatly influenced by Nobel Prize winner in Economics Gary Becker, use the economic method to study human behavior applied to the most varied subjects, such as crime, education, family, discrimination and determinants of inequalities.

Why is it important to study the family as an economic unit? Because issues such as investment in human capital, consumption, labor supply, fertility, among others, are decided within the family.

Most of the time, agents decide their actions taking other family members into consideration. In this sense, the economic approach allows scientists to study the behavior of family members when they seek to optimize their well-being and consumption considering the restrictions to which they are subject, that is, budgetary and time allocation restrictions. Thus, family formation, whether formal or informal, is the driving force behind decisions with relevant economic impacts. Furthermore, this economic unit functions as a producer of goods and services for itself and society.

The benefits of marriage are wide-ranging. Payment of rent, unemployment insurance (the chance of both being unemployed at the same time is lower), benefits from health insurance plans and household chores (such as cooking and cleaning), for example, can be divided by two. From the union of two people, it is possible to record cooperation gains from family members. However, conflicts over how to distribute these gains may arise.

Cooperation occurs in the division of tasks between members to optimize the production of goods and services. It is from this implicit contract that gender differences and the sexual division of labor often arise. Historically, we observe that men allocate more time to the labor market, and women divide their time allocation between the labor market and unpaid work (family care).

Another decision at the family level is how the goods and services produced will be distributed. What will be the share of this gain for each family member? It is the bargaining power that will determine this division and it depends on a set of factors.

Economic literature sheds light on these issues by showing that the division of marriage earnings often depends on the ratio between men and women, who has a greater share of family income, divorce and child custody laws, among others. Studies show that paying for income transfer programs, such as Bolsa Família, for women increases their bargaining power, including positive effects on children’s nutrition. In China, the one-child policy has led to an increase in the male to female ratio, increasing female bargaining power.

The dynamics of family formation and intra-family decisions are much more complex than they seem, as are their consequences. The drop in the birth rate, which we have observed for some time in several countries, including Brazil, has a direct relationship with the way families divide their time between work and care. As childcare falls mostly to women, they are postponing motherhood, having fewer children or choosing not to have them. The consequences are felt in demography, economic growth and the sustainability of pensions.

Among these and other reasons, this is why economists have increasingly focused on understanding family dynamics.

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