Relative income and female autonomy: Evidence from India

This study attempts to explore how relative income contributes to the autonomy of women at both personal and household levels. The potential problem of endogeneity, or reverse causality, in examining the link between female autonomy and relative income is addressed using the Instrumental Variable (IV) estimation approach. The years of education of a woman and her husband are used as instruments for the woman's relative income. Along with the use of exogenous variables as instruments, the heteroskedasticity present in the data is also exploited to form instruments for the relative income of women. The results of this study suggest that relative income unambiguously improves autonomy of women in household decision making but its beneficial effect on autonomy in personal decision making was not found to hold true in all the model specifications (with alternative identification schemes) as employed in this study.