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We look at the socio-economic impacts of a rural livelihoods program in Bihar, one of India's poorest states. Adopting a model prevalent in several Indian states, the Bihar Rural Livelihoods Project, known locally as JEEViKA, relies on mobilizing women from impoverished, socially marginalized households into Self Help Groups. Simultaneously, activities such as micro-finance and technical assistance for agricultural livelihoods are taken up by the project and routed to the beneficiaries via these institutions; these institutions also serve as a platform for women to come together and discuss a multitude of the socio-economic problems that they face.

We use a retrospective survey instrument, coupled with PSM techniques to find that JEEViKA, has engendered some significant results in restructuring the debt portfolio of these households; additionally, JEEViKA has been instrumental in providing women with higher levels of empowerment, as measured by various dimensions. Since the evidence points to improvements in economic and gender inequality, we consider household bargaining models to unpack the causality between economics and empowerment.

We propose a new framework of household bargaining that allows us to map out the interplay between household outcomes and bargaining equilibrium. We then proceed to demonstrate that when bargaining powers are endogenously determined, a strategy to deliberately suppress household income is rational. We regard such behavior as `Aggregate Inefficient' behavior, and note that it is completely possible for such behavior to coexist with Pareto Efficiency in consumption.

We use the Indian Human Development Survey to test the demand systems implied by two competing frameworks: collective bargaining and the framework that rationalizes aggregate inefficient behavior. We find that although the implications of the Collective Hypothesis are rejected, those for the alternate framework are never rejected. Thus, we conclude that `Aggregate Inefficient' behavior is a real possibility in some societies.

We note that strategies geared towards Aggregate Inefficiency are driven by concerns over one's bargaining position in the household; such strategies are encouraged by social norms which create pressure on the individual to maintain a position of dominance in the household, especially in patriarchal societies. Thus any policy to encourage gender empowerment by providing women with more resources (for example, policies to increase women's labor force participation) must crack the conundrum of Aggregate Inefficiency by working on the stumbling blocks of individual incentives and social norms to prevent participation.