On the theoretical side, an important challenge for future research is to model the link between public-good provision and economic development more explicitly. The main reason why public-good provision in the household is thought to promote development is that investments in children lead to more human-capital accumulation. However, explicit models of human-capital accumulation in the family distinguish between the quantity and quality dimension of children, i.e., the tradeoff between how many children to have and how much education to provide them with. Even if an intervention produces an unambiguous increase in spending on children, there still would be no benefit for development if the additional spending resulted in higher fertility rather than an increase in education. Thus, combining models of marital bargaining with explicit theories of human-capital investment will be another important step towards an encompassing analysis of gender-based development policies.

The remainder of this paper is organized as follows. In Section 2 we provide an overview of the empirical findings that motivate our study. In Section 3, we review the main theories of marital bargaining and justify our focus on the noncooperative bargaining model. In Section 4 we introduce our baseline model and demonstrate that frictions in the substitution of public-good provision between women and men are required to overcome the income pooling result. Section 5 introduces such frictions in different ways and contains our main results on the effects of female empowerment polices. In Section 6 we extend our framework to a dynamic setting. Section 7 concludes.

# **2  What are the Facts?**

In this section, we survey the empirical literature on the link between female empowerment and development. Claims that female empowerment promotes development are largely based on empirical evidence that higher female resources (in the form of income, education, or assets) are associated with higher spending on children. We provide a review of this evidence, and in the remainder of the paper we will develop economic models that can reproduce these findings. We also briefly discuss a number of studies that focus on other aspects of the link between female empowerment and development.

# **2.1  Correlations between Female Income and Child Outcomes**

There exists a sizeable literature that uses household data to document correlations between gender-specific resources and outcomes, specifically with regard to spending on children and children's outcomes. For an early survey of this literature see Haddad, Hoddinot, and Alderman (1997). Since these studies are based on observational data, one cannot rule out that the results are driven by unobserved heterogeneity, i.e., there may be unmeasured ways in which households with larger female income shares are special. Nevertheless, the findings in this literature are suggestive, and they motivate much of the subsequent research in the area.

Hoddinott and Haddad (1995) uses cross sectional data from the 1986/87 Living Standards Survey of the Cote d'Ivoire. The authors find that an increase in the wife's share of income is associated with an increase in the share of expenditures on food, and a decrease in the share of expenditures on alcohol and cigarettes.<sup>2</sup> Based on the same data, Haddad and Hoddinott (1994)

> 2The study also finds a decrease in meals eaten out, children's clothing and adult clothing. But these findings are not

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