Montane populations of the Australian allodapine bee, Exoneura bicolor, are characterized by high levels of cooperative nesting and strongly female-biased sex ratios. A conspecific population from heathland shows much lower levels of cooperative nesting and lower levels of female bias. In both habitats, sex-ratio bias is greatest in the smallest brood sizes and becomes successively less biased in larger broods. Parity is approached in the largest heathland colonies, but not for any brood-size category in montane areas. Adult intracolony relatedness is moderately high for colonies in both reused and newly founded nests in the montane habitat, but probably low or zero for newly founded nests in heathland. Colony efficiency, measured as the number of brood per adult, increases with colony size in both habitats, suggesting that cooperation between females increases mean female fitness. It is argued that patterns of sex allocation are consistent with nonlinear fitness-return models, in which the mean reproductive value of daughters increases with the number of daughters produced in a brood. Such increases probably arise from a number of social interactions, including cooperative brood defense, increased task efficiency, and lower per capita costs in nest construction. The term "local fitness enhancement" is introduced here to describe these effects collectively. The female-biased ratios should lower selective thresholds for sib-directed altruism, at least in the earlier stages of colony development. It is argued that local fitness enhancement facilitates eusociality in allodapine bees and could also play a role in other haplodiploid taxa, provided cooperative nesting largely involves sisters, colony efficiency increases with colony size, and optimal colony sizes are only achieved after two or more generations after founding.