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Saving for Retirement: Household Bargaining and Household Net Worth

  • Shelly J. Lundberg

    (University of Washington)

  • Jennifer Ward-Batts

    (University of Michigan)

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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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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  1. Michael D. Hurd & Kathleen McGarry, 1993. "Evaluation of Subjective Probability Distributions in the HRS," NBER Working Papers 4560, National Bureau of Economic Research, Inc.
  2. Michael Baker, 2002. "The Retirement Behavior of Married Couples: Evidence from the Spouse's Allowance," Journal of Human Resources, University of Wisconsin Press, vol. 37(1), pages 1-34.
  3. Michael D. Hurd, 1990. "The Joint Retirement Decision of Husbands and Wives," NBER Chapters, in: Issues in the Economics of Aging, pages 231-258 National Bureau of Economic Research, Inc.
  4. Blau, David M., 1997. "Social security and the labor supply of older married couples," Labour Economics, Elsevier, vol. 4(4), pages 373-418, December.
  5. Lundberg, S. & Pollak, R.A., 1991. "Separate Spheres Bargaining and the Marriage Market," Discussion Papers in Economics at the University of Washington 91-08, Department of Economics at the University of Washington.
  6. Michael D. Hurd, 1999. "Mortality Risk and Consumption by Couples," NBER Working Papers 7048, National Bureau of Economic Research, Inc.
  7. Mark Bagnoli & Ted Bergstrom, . "Courtship as a Waiting Game," Papers _030, University of Michigan, Department of Economics.
  8. Chiappori, P.A., 1989. "Collective Labour Supply and Welfare," DELTA Working Papers 89-07, DELTA (Ecole normale supérieure).
  9. James P. Smith, 2004. "Racial and Ethnic Differences in Wealth in the Health and Retirement Study," Labor and Demography 0408011, EconWPA.
  10. 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.
  11. B. Douglas Bernheim & Jonathan Skinner & Steven Weinberg, 1997. "What Accounts for the Variation in Retirement Wealth Among U.S. Households?," Working Papers 97035, Stanford University, Department of Economics.
  12. Shelly Lundberg & Elaina Rose, 1999. "The Determinants of Specialization within Marriage," Working Papers UWEC-2005-07, University of Washington, Department of Economics.
  13. Martin Browning, 1994. "The Saving Behaviour of a Two Person Household," Discussion Papers 96-09, University of Copenhagen. Department of Economics, revised Jan 1996.
  14. Alan L. Gustman & Thomas L. Steinmeier, 1998. "Effects of Pensions on Saving: Analysis with Data from the Health and Retirement Study," NBER Working Papers 6681, National Bureau of Economic Research, Inc.
  15. Browning, Martin, 1995. "Saving and the intra-household distribution of income: an empirical investigation," Ricerche Economiche, Elsevier, vol. 49(3), pages 277-292, September.
  16. Blau, David M, 1998. "Labor Force Dynamics of Older Married Couples," Journal of Labor Economics, University of Chicago Press, vol. 16(3), pages 595-629, July.
  17. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  18. Gustman, Alan L & Steinmeier, Thomas L, 2000. "Retirement in Dual-Career Families: A Structural Model," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 503-45, July.
  19. Browning, M. & Bourguignon, F. & Chiappori, P.A. & Lechene, V., 1992. "Incomes and Outcomes: A structural Model of Intra-Household Allocation," DELTA Working Papers 92-23, DELTA (Ecole normale supérieure).
  20. 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.
  21. Richard Disney & Paul Johnson & Gary Stears, 1998. "Asset wealth and asset decumulation among households in the Retirement Survey," Fiscal Studies, Institute for Fiscal Studies, vol. 19(2), pages 153-174, May.
  22. James Banks & Richard Blundell & Sarah Tanner, 1995. "Is there a retirement-savings puzzle?," IFS Working Papers W95/04, Institute for Fiscal Studies.
  23. Lundberg, Shelly & Pollak, Robert A, 1994. "Noncooperative Bargaining Models of Marriage," American Economic Review, American Economic Association, vol. 84(2), pages 132-37, May.
  24. Shelly Lundberg & Robert A. Pollak, 1996. "Bargaining and Distribution in Marriage," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 139-158, Fall.
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