Working Paper: NBER ID: w19888
Authors: Matthias Doepke; Michele Tertilt
Abstract: Empirical evidence suggests that money in the hands of mothers (as opposed to fathers) increases expenditures on children. Does this imply that targeting transfers to women promotes economic development? Not necessarily. We consider a noncooperative model of the household where a gender wage gap leads to endogenous household specialization. As a result, women indeed spend more on children and invest more in human capital. Yet, depending on the nature of the production function, targeting transfers to womenmay be beneficial or harmful to growth. Transfers to women are more likely to be beneficial when human capital, rather than physical capital or land, is the most important factor of production. We provide empirical evidence supportive of our mechanism: In Mexican PROGRESA data, transfers to women lead to an increase in spending on children, but a decline in the savings rate.
Keywords: female empowerment; economic development; household decision-making; gender wage gap; human capital
JEL Codes: D13; J16; O10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| female empowerment (J16) | increased expenditures on children (J13) |
| targeting transfers to women (F16) | increased expenditures on children (J13) |
| mandated transfers to women (J79) | promote development (when human capital is main driver) (O15) |
| mandated transfers to women (J79) | hinder growth (when physical capital is critical) (D25) |
| mandated transfers to women (J79) | increase in children's human capital (J24) |
| mandated transfers to women (J79) | decrease in physical capital accumulation (E22) |
| increased expenditures on children (J13) | human capital accumulation (J24) |
| mandated transfers to women (J79) | tradeoff between immediate consumption and future investment (D15) |