Background and statement of the problem: There is sufficient evidence to say that female empowerment affects economic and social outcomes, in particular for girls. There is, however, no unified approach to the measurement of female empowerment. The relative economic position of the two spouses, which in turn may reflect the position of the extended families on both sides, may affect the woman’s influence on household decisions. And both economic empowerment and the woman’s decision-making power will depend on social norms, which in turn vary between and within societies. Research is still needed to understand these complex relations between economic empowerment, female decision-making power, social norms, and economic and social outcomes. Research methodology and data: The relative land ownership of the paternal and maternal sides of the extended family was used as a measure of female economic empowerment, and the measure was, in turn, used as an instrument for female decision-making power within the family. The latter was measured by DHS-type questions on who make important decisions within the family. In the second stage of the instrumental variable (IV) estimation it was investigated whether the general measure of decision making power affected a particular outcome, children’s education. Data was collected in an ethnically diverse area of the eastern plains of Nepal, where 480 women were surveyed. Research findings: The findings indicate that economic empowerment and subjective decision-making power have independent effects on children’s education. The relations are quite complex, indicating that one should not automatically use economic empowerment as the ultimate measure of female empowerment. In the present context there is a positive association between female empowerment and children’s education for both genders, whereas boys are prioritized if the paternal side of the family is economically weak. Furthermore, there is heterogeneity among social groups with respect to the importance men and women assign different levels of education for children of different genders. The main message is that the mother’s relative bargaining power matters in different ways – and through different mechanisms – and depends on the gender of the child, the social group and the level of education. Policy implications: Policies for female empowerment need to be tailor-made to specific societies and social groups. The findings indicate that policies for economic empowerment of women, such as education and entrepreneurship programs, may have to be combined with programs that affect social values and norms if the target is to change intrahousehold decisions.