Policies that aim to improve the position of women relative to men are desirable not only on equity but also on efficiency grounds. While developing countries continue to improve economic opportunities for women, inheritance laws remain 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 transfers that affect long-term development in far reaching ways.
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 in many developing countries face legal barriers preventing them from inheriting property. Widows and daughters, for instance, 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.
While the underlying social and cultural dynamics are complex, legislative reform to improve women’s inheritance rights could potentially provide a low-cost mechanism 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. Between 1986 and 1994, the states of Andhra Pradesh, Tamil Nadu, 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 impact of the reform could provide potentially important lessons for India, where similar national-level changes were made in 2005, and for other developing 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 (with Klaus Deininger and Hari Nagarajan), I use data from the 2006 nationally representative Rural Economic and Demographic Survey, conducted by the National Council of Applied Economic Research on 8190 rural households in sixteen major states of India. 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. Two different strategies allow us to achieve identification. First, a focus on within household differences between males and females, comparing households in reform states under the original as compared to the new legal regime. Second, a comparison of outcomes for females depending on whether inheritance occurred in reform states or not. A range of other controls and placebo tests for non-Hindus, whose inheritance had been subject to different provisions and were not affected by the reform are used to check the robustness of results.
The findings show that (i) there is a clear discontinuity in the likelihood of females inheriting land at the time of the reform and an increasing trend in this variable thereafter; (ii) reforms had a positive impact on the total value of asset transfers women received (i.e. there is no evidence of substitution), the share of household land they received (i.e. not only token amounts), and their level of land ownership at the time of the survey (i.e. the effects are persistent); and (iii) girls but not boys whose education decisions were made under the amended inheritance regime had significantly higher levels of primary education than those for whom decisions were made under the old regime.
This study is one of the first attempts to estimate the impact of legislative changes in inheritance rights on women’s status, and shows that stronger inheritance rights for women can indeed be an effective mechanism for improving their access to physical and human capital. Legal provisions to make women’s inheritance rights more secure may have considerable appeal to policymakers as an option to reduce long-standing gender discrimination and improve social and productivity outcomes.