I. Introduction
Female “empowerment” has increasingly become a policy goal, both as an end to itself and as a
means to achieving other development goals.1 A growing literature on intra-household
bargaining finds that exogenous increases in female share of income, interpreted as providing the
female more power in the household, lead to an allocation of resources that better reflect
preferences of the woman (Duflo 2003; Rangel 2005). This often leads to greater investment in
education, housing, and nutrition for children (Thomas 1990; 1994; 1995; Duflo 2003). Many
development interventions have thus focused on transferring income as a way of inducing
empowerment.
However, it is not clear in theory that transfers of income alone to women can improve their
status in the household. Marginal increases in income given to women may be bargained over in
the same way as existing income, and are therefore not guaranteed to lead to gains in bargaining
power. What may be important is providing access to additional sources of income flows, and
giving control and property rights over allocated money.2 One could increase power directly by
providing unilateral access to a financial service, such as a loan or a savings account. Indeed,
microfinance proponents often argue that these empowerment mechanisms justifies increased
attention and financing to microfinance institutions, and perhaps even subsidies (Hashemi,
Schuler and Riley 1996; Kabeer 1999). There is, however, little rigorous evidence that
interventions that focus on power directly actually can promote female empowerment. Nor have
we been able to assess the consequences of such induced (rather than “naturally” encountered)
empowerment. This study contributes to this literature by exogenously creating a financial asset
1 See, for example, Engendering Development (World Bank 2001). By “female empowerment” we mean
increasing the bargaining power of the woman within the household, manifested through increased
influence in household decisions and through household outcomes that greater reflect her preferences.
2 Anderson and Eswaran (2005) find that income needs to be in the control of women- not just generated by
them- in order to impact their bargaining power in the household. The relevant threat point in their context,
as in ours where divorce is uncommon, is non-cooperative behavior.