A Purse of Her Own: Married Women's Access to Financial Services and Female Labor Supply

Best paper award at the MIFE early career workshop 2022.


In mid-20th century, US women often faced discrimination when applying for bank accounts or loans in their own names: banks frequently required male co-signers for loans and automatically transferred women’s accounts into joint accounts upon marriage. Such discriminatory practices were outlawed in different states at different times, culminating in national anti-discrimination legislation targeted at financial institutions in 1975. Exploiting the staggered introduction of these laws across states and over time, I find that independent access to financial services increased married women’s labor force participation by 4-7.5 ppt. To analyze the effects on household bargaining and divorce, I build a life-cycle model with endogenous divorce, female labor force participation, and savings decisions. Relative to a standard collective model of household bargaining, I introduce two additions: a norm cost the husband faces when his wife works, and a share of labor income that the wife can hide from the husband and use at her discretion. After calibrating the model to the US labor market in 1970, it is able to replicate the increase in female labor supply after granting women access to independent financial services. Finally, I use the model to study the effects of women’s independent control over finances on divorce and find that the probability to be divorced 12 years after marriage increases by 4.6 ppt.