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Does the Balance of Power Within a Family Matter? The Case of the Retirement Equity Act

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Saku Aura ()

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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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Paper provided by CESifo GmbH in its series CESifo Working Paper Series with number CESifo Working Paper No. 734.

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Date of creation: 2002
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Handle: RePEc:ces:ceswps:_734

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Find related papers by JEL classification:
D10 - Microeconomics - - Household Behavior - - - General
J10 - Labor and Demographic Economics - - Demographic Economics - - - General

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Jeffrey R. Brown, 1999. "Are the Elderly Really Over-Annuitized? New Evidence on Life Insurance and Bequests," NBER Working Papers 7193, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Esther Duflo, 2000. "Grandmothers and Granddaughters: Old Age Pension and Intra-household Allocation in South Africa," NBER Working Papers 8061, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Browning, Martin, 2000. " The Saving Behaviour of a Two-Person Household," Scandinavian Journal of Economics, Blackwell Publishing, vol. 102(2), pages 235-51, June. [Downloadable!] (restricted)
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  4. Lundberg, Shelly & Pollak, Robert A, 1993. "Separate Spheres Bargaining and the Marriage Market," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 988-1010, December. [Downloadable!] (restricted)
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  5. Shelly J. Lundberg & Jennifer Ward-Batts, 2000. "Saving for Retirement: Household Bargaining and Household Net Worth," Working Papers wp004, University of Michigan, Michigan Retirement Research Center. [Downloadable!]
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  6. Chiappori, Pierre-Andre, 1988. "Nash-Bargained Households Decisions: A Comment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(4), pages 791-96, November. [Downloadable!] (restricted)
  7. Kotlikoff, Laurence J, 1988. "Intergenerational Transfers and Savings," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 41-58, Spring. [Downloadable!] (restricted)
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  8. B. Douglas Bernheim & Lorenzo Forni & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1999. "The Adequacy of Life Insurance: Evidence from the Health and Retirement Survey," NBER Working Papers 7372, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Brigitte C. Madrian & Dennis F. Shea, 2000. "The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior," NBER Working Papers 7682, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. K. C. Holden & S. Nicholson, . "Selection of a Joint-and-Survivor Pension," Institute for Research on Poverty Discussion Papers 1175-98, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
  11. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
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  12. B. Douglas Bernheim, 1992. "How Strong are Bequest Motives? Evidence Based on Estimates of the Demand for Life Insurance and Annuities," NBER Working Papers 2942, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Manser, Marilyn & Brown, Murray, 1980. "Marriage and Household Decision-Making: A Bargaining Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 31-44, February. [Downloadable!] (restricted)
  14. McElroy, Marjorie B & Horney, Mary Jean, 1981. "Nash-Bargained Household Decisions: Toward a Generalization of the Theory of Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 333-49, June. [Downloadable!] (restricted)
  15. Chiappori, Pierre-Andre, 1991. "Nash-Bargained Household Decisions: A Rejoinder," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 761-62, August. [Downloadable!] (restricted)
  16. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January. [Downloadable!] (restricted)
  17. Lundberg, S.J. & Pollak, R.A. & Wales, T.J., 1994. "Do Husbands and Wives Pool Their Resources? Evidence from U.K. Child Benefit," Discussion Papers in Economics at the University of Washington 94-6, Department of Economics at the University of Washington.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Strand, Jon, 2003. "Public-good valuation and intrafamily allocation," Memorandum 28/2002, Oslo University, Department of Economics. [Downloadable!]
  2. Saku Aura, 2003. "Uncommitted Couples: Some Efficiency and Policy Implications of Marital Bargaining," Microeconomics 0304002, EconWPA. [Downloadable!]
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  3. Jeffrey R. Brown, 2007. "Rational and Behavioral Perspectives on the Role of Annuities in Retirement Planning," NBER Working Papers 13537, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. John Beshears & James J. Choi & David Laibson & Brigitte C. Madrian, 2006. "The Importance of Default Options for Retirement Savings Outcomes: Evidence from the United States," NBER Working Papers 12009, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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