Research

This paper investigates the impact of childbirth on wives’ bargaining power and welfare by examining labor market responses and adjustments in intrahousehold resource allocation. Using data from the Japanese Panel Survey of Consumers (1993--2020) and employing an event study approach, we find that wives, compared to their husbands, experience a 34.9% decrease in private consumption and a 7.5% decrease in leisure following the birth of the first child. We develop a collective bargaining framework to estimate the effects of parenthood on bargaining power, preferences for consumption and leisure, and productivity in producing public goods for both wives and husbands. The wife’s bargaining power declines by 34.3% after childbirth, while both spouses’ preferences for public goods increase. Consequently, the arrival of a child leads to a 12.2% decline in welfare for wives but a 7.0% increase for husbands. Our counterfactual analysis indicates that if a wife’s bargaining power had remained unaffected by fertility or wage effects, her welfare would have increased by 2.6 percentage points compared to the baseline. Furthermore, if there had been no wage penalties imposed on the wife, her welfare would have increased by 7.8 percentage points.