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Saving for Retirement: Household Bargaining and Household Net Worth

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  • Shelly J. Lundberg

    (University of Washington)

  • Jennifer Ward-Batts

    (University of Michigan)

Abstract

Traditional economic models of savings treat the household as a single individual, and do not allow for the separate preferences of and possible conflicts of interest between husbands and wives. Since wives are typically younger than their husbands and life expectancy for women exceeds that for men, wives may prefer to save more for retirement than do their husbands. This suggests that households in which wives have greater relative bargaining power may accumulate greater net worth as they approach retirement. We explore the importance of bargaining in marriages of older couples by examining the empirical relationship between the net worth of couples in the first wave of the Health and Retirement Survey and factors that may affect the relative bargaining power of husbands and wives, such as control over income sources, relative age, and relative education. We find that measures of long-term relative bargaining power of wives have a positive effect on the household's wealth, even when controlling for other factors. In general, the realized effects of reforms intended to increase private saving for retirement may depend on how these reforms affect household bargaining relationships, as well as how they affect individual incentives to save.

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Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1414.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:1414

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  9. Martin Browning, 1994. "The Saving Behaviour of a Two Person Household," Discussion Papers 96-09, University of Copenhagen. Department of Economics, revised Jan 1996.
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  11. 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.
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  16. Shelly Lundberg & Elaina Rose, 1999. "The Determinants of Specialization within Marriage," Working Papers UWEC-2005-07, University of Washington, Department of Economics.
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