Endogenous, intra-household decision-making and its impact on the labor supply of couples in rural India*

Using data for rural India, this paper analyzes households' labor supply decision-making, taking into consideration non-participation, endogenous intrahousehold bargaining and nutritional status. Analyses of unitary and collective models suggest that bargaining between household members forms the basis of households' decisions, and these decisions alter households' internal power balance. Analysis of households' internal bargaining process suggests that women's bargaining power increases when their wages are higher and they are better educated. The results indicate that it is crucial to account for the mechanics of decision-making within households when studying the effects of changing labor market conditions or designing development policies to improve individual well-being or to empower women.