Periodic Reporting for period 2 - FEMPOWER (Inefficient Decision Making and Female Bargaining Power)
Okres sprawozdawczy: 2022-10-01 do 2024-03-31
Many important decisions are made by families, not by individuals. While economists have long accepted and studied inefficiencies in product and labour markets, the same cannot be said for their analysis of the family. Dominant economic models of household decision-making assume a utopian scenario characterised by perfect cooperation, commitment, and full efficiency. While elegant and tractable, a range of common family behaviours fall outside the scope of these frameworks. For example, approximately 50% of marriages end in divorce in OECD countries, with the division of assets and custody of children disputed in at least 15% of cases (de Blasio and Vuri, 2013); and resources including money and contraceptives are often concealed by spouses from one another with implications for a range of behaviours including completed fertility, savings, and consumption (Ashraf et al, 2014). This limits our understanding of households as economic units that jointly make consumption and investment decisions (despite potentially conflicting interests), as well as households’ role in helping to insure the individuals within them against shocks. Furthermore, the policy prescriptions implied by the standard models can result in harmful unintended consequences if implemented in contexts where non-cooperative decision-making prevails (Erten and Keskin, 2018; Bobonis et al, 2013).
FEMPOWER will make both methodological and substantive contributions to the economic literature on female bargaining power by harnessing novel sources of administrative and survey data and by building on my expertise in developing innovative ways of modelling family decision making. FEMPOWER will develop frameworks for estimating models of decision-making that can capture potentially inefficient behaviour in three different Work Packages: (1) Violence & Household Decision-Making; (2) Decision-Making at Divorce; (3) Inefficient & Non-Cooperative Households. Each work package will be structured around three complementary activities:
1. Developing high quality empirical facts about behaviour in these contexts using novel administrative data sources;
2. Deriving the conditions under which new, innovative economic theories of behaviour can be tested and estimated;
3. Estimating the key economic parameters of interest to assess the positive and normative impact of policy proposals.
FEMPOWER will make both methodological and substantive contributions to the economic literature on female bargaining power by harnessing novel sources of administrative and survey data and by building on my expertise in developing innovative ways of modelling family decision making. FEMPOWER will develop frameworks for estimating models of decision-making that can capture potentially inefficient behaviour in three different Work Packages: (1) Violence & Household Decision-Making; (2) Decision-Making at Divorce; (3) Inefficient & Non-Cooperative Households. Each work package will be structured around three complementary activities:
1. Developing high quality empirical facts about behaviour in these contexts using novel administrative data sources;
2. Deriving the conditions under which new, innovative economic theories of behaviour can be tested and estimated;
3. Estimating the key economic parameters of interest to assess the positive and normative impact of policy proposals.
Work Package 1 aims to provide new insights into the economic causes and consequences of domestic violence and gender-based violence more broadly. This research stream uses Finnish policing data linked to other sources of administrative register data. This has already achieved notable outputs including an article in the Quarterly Journal of Economics on the economic consequences of violence and harassment between colleagues, Violence Against Women at Work. In this paper, we document large, persistent labor market impacts of between-colleague violence on victims and perpetrators. Male perpetrators experience substantially weaker consequences after attacking female colleagues. Perpetrators' relative economic power in male-female violence partly explains this asymmetry. Turning to broader implications for firm recruitment and retention, we find that male-female violence causes a decline in the proportion of women at the firm, both because fewer new women are hired and current female employees leave. Management plays a key role in mediating the impacts on the wider workforce. Only male-managed firms lose women. Female-managed firms exhibit a key difference relative to male-managed firms: male perpetrators are less likely to remain employed after attacking their female colleagues.
A second completed paper is The Dynamics of Abusive Relationships which "Revise and Resubmit" at the Quarterly Journal of Economics. Domestic abuse encompasses a range of damaging behaviours beyond physical violence, including economic and emotional abuse. This research examines the impact of cohabiting with an abusive partner on victims' economic outcomes. In so doing, we highlight the systematic role of economic suppression in such relationships. Using administrative data and a matched control event study design, along with a within-individual comparison of outcomes across relationships, we document three new facts. First, women who begin relationships with (eventually) physically abusive men suffer large and significant earnings and employment falls immediately upon cohabiting with the abusive partner. Second, this decline in economic outcomes is non-monotonic in women's pre-cohabitation outside options. Third, men who are violent against women in any capacity impose economic costs on all their female partners, even those who do not report physical violence. To rationalize these findings, we develop a new dynamic model of abusive relationships where women do not perfectly observe their partner's type, and abusive men have an incentive to use economic suppression to sabotage women's outside options and their ability to later exit the relationship.
A final paper that we are working on is on the economic consequences of sexual assault. Rape and sexual assault are common worldwide: one in twelve women across 28 EU countries have experienced a rape (European Institute for Gender Inequality, 2012). Yet there is no systematic evidence on how sexual violence affects women's economic outcomes. We show that the age-25 employment and college completion rates of younger victims are 12.8 p.p and 10 p.p lower respectively than those of other young women with the same (pre-event) GPA and family background. For older victims, we use a matched difference-in-difference design to show that rape has a large and persistent economic impact on women: victims' employment falls by 7.8 percentage points and their labor market earnings decline 16.5% relative to observationally equivalent women in the five years following the assault. These results are robust to controlling for a variety of shocks preceding rape that could make it more likely for a woman to be victimized and independently suppress her economic outcomes. We also document important spillovers of these crimes to the victim's parents and peers. Mothers and fathers experience significant declines in their employment and female schoolmates experience a deterioration in mental health. Last, we are investigating whether clearance rates mitigate the negative impacts on victims.
Work Packages 2 and 3 are progressing well but required data deviations from the original proposal. I have one completed paper on methodological difficulties arising from the original approach I'd intended to take, "Birth Timing and Spacing by Skill: Implications for the Estimation of Child Penalties". In this paper, we use rich Danish register data to develop new facts about the relationship between skills, the timing and spacing of births, and labour market dynamics. We show that there is substantial heterogeneity in fertility dynamics by maternal skill levels. We also show that the spacing of pregnancies tends to be tighter for the highly educated, resulting in relatively higher levels of fertility and time on parental leave in the years immediately after first birth. We estimate event studies by education level and find that much of the child penalties can be explained by subsequent births, especially for the highly educated.
A second completed paper is The Dynamics of Abusive Relationships which "Revise and Resubmit" at the Quarterly Journal of Economics. Domestic abuse encompasses a range of damaging behaviours beyond physical violence, including economic and emotional abuse. This research examines the impact of cohabiting with an abusive partner on victims' economic outcomes. In so doing, we highlight the systematic role of economic suppression in such relationships. Using administrative data and a matched control event study design, along with a within-individual comparison of outcomes across relationships, we document three new facts. First, women who begin relationships with (eventually) physically abusive men suffer large and significant earnings and employment falls immediately upon cohabiting with the abusive partner. Second, this decline in economic outcomes is non-monotonic in women's pre-cohabitation outside options. Third, men who are violent against women in any capacity impose economic costs on all their female partners, even those who do not report physical violence. To rationalize these findings, we develop a new dynamic model of abusive relationships where women do not perfectly observe their partner's type, and abusive men have an incentive to use economic suppression to sabotage women's outside options and their ability to later exit the relationship.
A final paper that we are working on is on the economic consequences of sexual assault. Rape and sexual assault are common worldwide: one in twelve women across 28 EU countries have experienced a rape (European Institute for Gender Inequality, 2012). Yet there is no systematic evidence on how sexual violence affects women's economic outcomes. We show that the age-25 employment and college completion rates of younger victims are 12.8 p.p and 10 p.p lower respectively than those of other young women with the same (pre-event) GPA and family background. For older victims, we use a matched difference-in-difference design to show that rape has a large and persistent economic impact on women: victims' employment falls by 7.8 percentage points and their labor market earnings decline 16.5% relative to observationally equivalent women in the five years following the assault. These results are robust to controlling for a variety of shocks preceding rape that could make it more likely for a woman to be victimized and independently suppress her economic outcomes. We also document important spillovers of these crimes to the victim's parents and peers. Mothers and fathers experience significant declines in their employment and female schoolmates experience a deterioration in mental health. Last, we are investigating whether clearance rates mitigate the negative impacts on victims.
Work Packages 2 and 3 are progressing well but required data deviations from the original proposal. I have one completed paper on methodological difficulties arising from the original approach I'd intended to take, "Birth Timing and Spacing by Skill: Implications for the Estimation of Child Penalties". In this paper, we use rich Danish register data to develop new facts about the relationship between skills, the timing and spacing of births, and labour market dynamics. We show that there is substantial heterogeneity in fertility dynamics by maternal skill levels. We also show that the spacing of pregnancies tends to be tighter for the highly educated, resulting in relatively higher levels of fertility and time on parental leave in the years immediately after first birth. We estimate event studies by education level and find that much of the child penalties can be explained by subsequent births, especially for the highly educated.
This grant is leading to new approaches to study gender-based violence using population data, in addition to providing new empirical results with important policy and academic implications. One key methodological innovation has been the merging of police records, health data and economic data to shed new light on the causes and consequences of gender-based violence. This has not been previously done and has been noted as a particular achievement in our peer-reviewed outlets. My new work on child penalties could have large consequences for empirical work in this field by sheding light on the key role played by higher-order fertility and family leave in child penalties on labour market outcomes.