Policymakers should aim to improve women’s position relative to men’s – not only is it fairer, but it is also more efficient, according to those in favour such initiatives (see for example Duflo 2003).
While developing countries continue to improve equality of economic opportunity for women, inheritance law remains strongly biased against women in many societies. When the distribution of inherited wealth is highly unequal, the effect of this disparity on economic inequality is of considerable interest. Parental bequests of material wealth and human capital investments represent central forms of intergenerational transfer that affect long-term development in far reaching ways (Becker and Tomes 1979, De Nardi 2004).
An extensive literature, both empirical and theoretical, shows that the transmission of physical and human capital from parents to children is a crucial determinant of an individual’s wealth and earnings ability (Behrman and Rosenzweig 2004).
At low levels of development, land is a key asset and an essential source of livelihood. It is not surprising to find that societies have long developed rules to govern how land is transferred across generations. Women’s ability to inherit land is often restricted. Widows and daughters often possess only temporary rights to land, leading to lower productivity and greater likelihood of being affected by land conflict. In light of evidence documenting the importance of asset ownership for women’s bargaining power, their opportunities to earn a livelihood, and intra-household allocation of resources toward consumption and investment, constraints on women’s legal rights to property are likely to be at the root of broader patterns of inequality (Thomas 1994, Anderson and Eswaran 2009).
The Hindu Succession Act Amendment
While the underlying social and cultural dynamics are complex, legislative reform to improve women’s inheritance rights could potentially provide a low-cost way to reduce gender discrimination and improve a range of socioeconomic outcomes for women. State-level reform of inheritance laws in India provides an interesting natural experiment for exploring whether and to what extent such efforts have been effective. In 1994, the states of Karnataka and Maharashtra amended the Hindu Succession Act, granting daughters equal shares in inheritance relative to sons that were denied to daughters in the past. The results of the reform could provide potentially important lessons for India, where similar, national-level changes were made in 2005, and for countries where inheritance rights remain severely biased against women. The passage of sufficient time since the amendment was enacted, and the availability of unique data over three generations, allow assessment of the impact of the legal change on women’s asset endowment and socioeconomic outcomes.
In a recent paper (Deininger et al. 2010), we use data from the 2006 nationally representative Rural Economic and Demographic Survey, conducted by the National Council of Applied Economic Research, on 1,371 rural Hindu households in Karnataka and Maharashtra. The survey contains detailed information on the parents, siblings, and children of household heads, providing quantitative measures of intergenerational transfers of both physical and human capital investments.
The causal effect is isolated by exploiting the variation in the timing of father's death to compare within household bequests of land given to sons and daughters in the two states. We find that while the amendment did not fully eliminate the underlying inequality, it increased women’s likelihood of inheriting land by 22 percentage points. Even in cases where the actual inheritance is not yet observed, the fact that a woman can expect to inherit property may increase her bargaining power or affect her marital prospects. Indeed, we find a robust increase in women’s age at marriage (by 0.5 years) after the reform, and women achieved better outcomes in the marriage market, such as marrying at a later age, marrying a more educated spouse, and being able to make favourable reproductive decisions.
The results also point to a positive and significant impact on women’s educational attainment. Girls who started their education after the amendment came into force had nearly four months more of elementary education in 2006. This suggests a genuine improvement in women’s status, rather than a substitution away from human capital to physical capital transfers by parents to their daughters following the legislative amendment. Estimated effects appear to increase over time, which can be attributed to learning about the content of the amendment. This suggests that in India, better dissemination of the 2005 national legal change could significantly improve women’s status.
Legal barriers to women’s ability to inherit property often put women at a strong disadvantage and are likely to be at the root of broader patterns of inequality. This column is one of the first attempts to estimate the impact of legislative changes in inheritance rights on women’s status in India. It shows that while more gender-equal inheritance rights did lead to positive effects for women, they did not fully eliminate the underlying gender inequality.
Anderson, S and M Eswaran (2009), “Determinants Female Autonomy: Evidence From Bangladesh”, Journal of Development Economics, 90(2):179-191.
Becker, GS and N Tomes (1979), “An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility”, Journal of Political Economy, 87(6):1153-1189.
Behrman, JR and MR Rosenzweig (2004), “Parental Allocations to Children: New Evidence on Bequest Differences among Siblings”, Review of Economics and Statistics, 86(2):637-640.
De Nardi, M (2004), “Wealth Inequality and Intergenerational Links”, Review of Economic Studies, 71:743-768.
Deininger, Klaus & Goyal, Aparajita & Nagarajan, Hari (2010), "Inheritance law reform and women's access to capital : evidence from India's Hindu succession act," Policy Research Working Paper 5338, The World Bank
Duflo, E (2003), “Grandmothers and Granddaughters: Old-Age Pensions and Intrahouse-hold Allocation in South Africa”, World Bank Economic Review, 17(1):1-25.
Thomas, D (1994), “Like Father, Like Son or Like Mother, Like Daughter: Parental Education and Child Health”, Journal of Human Resources, 29(4):950-989.