Testing for the Existence of Bargaining in Rural Households: a Study of Decisions on Labor Market Participation in the Cordillera Region of the Philippines

Lorelei Crisologo Mendoza and Lodewijk Berlage

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: In this paper we derive testable implications of a unitary farm household model and a non-unitary, i.e. bargaining, model. In the unitary household model the impact of spouse specific resources and non-labor income on household decisions should not be different from that of the resources and non-labor income common to the household. In a bargaining model we expect to find a specific impact of spouse specific resources and non-labor income. Our empirical tests are based on a small survey of households in the Cordillera region of Northern Luzon (Philippines). In this region each spouse retains specific rights on her/his inherited land, although within marriage this land is treated as part of the household farm. Inherited land is a truly exogenous variable, which we use as the indicator of bargaining power. We perform probit regressions in which the spouses’ inherited land is a determinant of the probability that a husband or wife participates in the labor market. The statistical results provide some evidence of a specific impact of spouse specific land on labor market participation decisions and therefore cast doubt on the unitary farm household model. They are compatible with a bargaining model of household behavior.

Date: 2002-03
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:ces0209

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