Intra-Household Bargaining and Labor Market Outcomes - Evidence from Shared Parental Leave.

Abstract

This paper examines the impact of intra-household decisions on labor market outcomes. We study the introduction of shared parental leave in Portugal, which lets parents decide on the allocation of leave days. Using matched employer-employee data, we find that wages of women increase by 1 percent relative to the wages of men. Moreover, we find that this increase is larger for women that make up a larger share of overall household income, and therefore have more bargaining power. We also show that the introduction of shared parental leave completely undoes the child penalty in wages, hours, and probability of being employed. Our results suggest that the effectiveness of childcare policies is determined by intra-household decisions.