Research by Hosny Zoabi “Women’s Liberation as a Financial Innovation” published in The Journal of Finance


Property rights are central to capitalism's ability to efficiently allocate resources. In one of the greatest victories of the feminist movement, common law countries such as England, the US, Canada, and Australia, began giving married women property rights in the second half of the 19th century, undoing the economic disadvantage imposed on married women by the common law doctrine of 'coverture'. The importance of property rights for the economy was confirmed by the fact that when women were granted economic rights, it greatly expanded financial markets and increased economic growth. 

Under coverture, marital property was divided into two types: 

  • personal, or moveable, property. This was anything that could literally be moved, such as clothing, money, stocks, bonds, and – importantly – bank deposits. Upon marriage, this property immediately became the husband’s; 
  • real property. This included houses and land, all of which came under the husband’s control but remained in the wife’s name. The husband could rent his wife's land and take the income, but he could not sell it without her permission. When the marriage ended (usually due to death) real property remained with the wife’s family.

Coverture created perverse incentives. It would have been imprudent for a single woman to put money in a bank or to hold any other asset except real property because her future husband would simply take it away from her. Parents who wanted to give their daughters gifts or bequests would have been equally hesitant to put money in a bank and would have used real estate instead. Less money deposited in banks would mean that less money was lent by banks, which prevented firms to increase their investments and thus prevented growth.

The fact that married women were given property rights in the US state-by-state allows us to compare economic outcomes in states that granted rights to those that did not. Massachusetts (1846) was the pioneer, and by 1920 all but four states had followed suit. The US census asked about real property and personal property holdings in 1860 and 1870. In the intervening decade, six states granted property rights to women. The research shows that after rights were granted, people increased their holdings of moveable assets at the expense of real assets. On average, personal assets increased by up to 15% after economic rights were granted.

Data from the US Office of the Comptroller of the Currency confirms that the growth in deposits and loans increased and shows approximately an 80 basis point decrease in interest rates, a large change given the average interest rate was 8%. This makes sense because if people deposit more money in banks, lending increase and the interest rate declines. In turn, if banks are lending more money, this helps industrialization. Interestingly, the growth in industrialization was strongly biased towards industries that used more capital per worker, as measured by the 1850 census of manufacturers. 

It is hard to overstate the social significance of the end of coverture for women. What was perhaps unexpected at the time was the financial significance for markets and economic growth. The research findings are based on the experience of women in the US, but they show clearly how expanding economic rights for women, or oppressed minorities, can create economic growth.

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A joint column by NES professor Hosni Zoabi and professors Moshe Hazan and David Weiss from Tel Aviv University was published on VoxEU.org in March 2019. Having received 131,000 views, it became the second most popular article of the month and entered the top 30 most popular articles ever on VoxEU.org. The research article was published in The Journal of Finance in December 2019.

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