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Unsupervised neural grammar induction aims to learn interpretable hierarchical structures from language data. However, existing models face an expressiveness bottleneck, often resulting in unnecessarily large yet underperforming grammars. We identify a core issue, *probability distribution collapse*, as the underlying cause of this limitation. We analyze when and how the collapse emerges across key components of neural parameterization and introduce a targeted solution, *collapse-relaxing neural parameterization*, to mitigate it. Our approach substantially improves parsing performance while enabling the use of significantly more compact grammars across a wide range of languages, as demonstrated through extensive empirical analysis.