Women's Liberation as a Financial Innovation

Moshe Hazan (hazan.moshe@gmail.com), David Weiss and Hosny Zoabi

No 11371, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Property rights are at the heart of capitalism's ability to efficiently allocate resources. Historically, married women have been one of the groups with the greatest legal disabilities in this regard, to the benefit of their husbands. Starting in the second half of the 19th century, common law countries, which were entirely dominated by men, gave married women property rights. Before this ``women's liberation,'' married women were subject to the laws of coverture. Coverture had detailed laws as to which spouse had ownership and control over various aspects of property both before and after marriage. These laws created a strong disincentive for women to invest in financial assets, such as stocks, bonds, and even bank deposits. This paper develops a general equilibrium model with endogenous determination of women's rights in which these laws affect portfolio choices, leading to inefficient allocations. We show how technological advancement eventually leads to men granting rights, and in turn how these rights affect development. Exploiting cross-state variation in the timing of rights, we show that increases in non-agricultural TFP predict the granting of rights. The granting of rights in turn leads to a dynamic labor reallocation towards the non-agricultural sector, representing further development. Finally, we show that women's rights are associated with lower interest rates and greater financial intermediation, consistent with an increase in the supply of credit.

Keywords: Women's liberation; Financial innovation; Investor protection; Economic growth; Political economy (search for similar items in EconPapers)
JEL-codes: E02 E44 G11 J12 K11 K36 N11 N21 O11 (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-ger, nep-gro, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Women's Liberation as a Financial Innovation (2019)
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