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Does the balance of power within a family matter? The case of the Retirement Equity Act

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  • Aura, Saku

Abstract

This paper studies within-family decision making regarding investment in income protection for surviving spouses. A change in US pension law (the Retirement Equity Act of 1984) is used as an instrument to derive predictions both from a simple Nash-bargaining model of the household and from the classical single-utility-function model of the household. This law change gave spouses of married pension-plan participants the right to survivor benefits unless they explicitly waived this right. The predictions of the classical model are rejected in favor of the predictions of the Nash-bargaining model in the data.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 89 (2005)
Issue (Month): 9-10 (September)
Pages: 1699-1717

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Handle: RePEc:eee:pubeco:v:89:y:2005:i:9-10:p:1699-1717

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Web page: http://www.elsevier.com/locate/inca/505578

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