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Thrifty Wives and Lavish Husbands? – Bargaining Power and Financial Dicisions in Germany

  • Matthias Keese

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    Numerous contributions in the literature show that household outcomes are influenced by the distribution of intra-household decision power expressed by bargaining indicators such as relative income of the spouses. Since women can expect a longer retirement period, increased female bargaining power could lead to higher savings and wealth accumulation. In contrast, a household could consume more in the current period (e.g., to the benefit of the children) if gender differences in saving preferences had other rationales. Using two German datasets and different measures of bargaining power, my analysis gives evidence that female bargaining power has no or a negative influence on saving and wealth even when controlling for expectations of future support by public pension schemes of the spouses. In some specifications, I also find positive associations between the wife‘s bargaining power and attitudes towards current consumption proxied by repayments of consumer loans. Different results for subsamples of couples with and without dependent children support the validity of the “kids-do-better hypothesis” which indicates that mothers use their bargaining power to enforce higher current consumption in favor of the children.

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    File URL: http://repec.rwi-essen.de/files/REP_11_258.pdf
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    Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0258.

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    Length: 39 pages
    Date of creation: Apr 2011
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    Handle: RePEc:rwi:repape:0258
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    1. Keese, Matthias, 2009. "Triggers and Determinants of Severe Household Indebtedness in Germany," Ruhr Economic Papers 150, Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI), Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. García-Mainar, Inmaculada & Molina, José Alberto & Montuenga, Víctor M., 2009. "Intra-Household Time Allocation: Gender Differences in Caring for Children," IZA Discussion Papers 4188, Institute for the Study of Labor (IZA).
    3. Lundberg, Shelly & Startza, Richard & Stillman, Steven, 2003. "The retirement-consumption puzzle: a marital bargaining approach," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1199-1218, May.
    4. John Gibson & Trinh Le & Grant Scobie, 2006. "Household Bargaining Over Wealth And The Adequacy Of Women'S Retirement Incomes In New Zealand," Feminist Economics, Taylor & Francis Journals, vol. 12(1-2), pages 221-246.
    5. Leora Friedberg & Anthony Webb, 2006. "Determinants and Consequences of Bargaining Power in Households," Working Papers, Center for Retirement Research at Boston College wp2006-13, Center for Retirement Research, revised Jun 2006.
    6. Matthias Keese, 2009. "Triggers and Determinants of Severe Household Indebtedness in Germany," SOEPpapers on Multidisciplinary Panel Data Research 239, DIW Berlin, The German Socio-Economic Panel (SOEP).
    7. Browning, Martin, 2000. " The Saving Behaviour of a Two-Person Household," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(2), pages 235-51, June.
    8. Phipps, Shelley & Woolley, Frances, 2008. "Control over money and the savings decisions of Canadian households," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(2), pages 592-611, April.
    9. Joachim R. Frick & Markus M. Grabka & Eva M. Sierminska, 2007. "Representative Wealth Data for Germany from the German SOEP: The Impact of Methodological Decisions around Imputation and the Choice of the Aggregation Unit," SOEPpapers on Multidisciplinary Panel Data Research 3, DIW Berlin, The German Socio-Economic Panel (SOEP).
    10. Browning, Martin, 1995. "Saving and the intra-household distribution of income: an empirical investigation," Ricerche Economiche, Elsevier, vol. 49(3), pages 277-292, September.
    11. Shelly Lundberg & Jennifer Ward-Batts, 2000. "Saving for Retirement: Household Bargaining and Household Net Worth," Working Papers 0026, University of Washington, Department of Economics.
    12. Bauer, Thomas & Sinning, Mathias, 2005. "The Savings Behaviour of Temporary and Permanent Migrants in Germany," CEPR Discussion Papers 5102, C.E.P.R. Discussion Papers.
    13. Ralf K. Himmelreicher & Dina Frommert, 2006. "Gibt es Hinweise auf zunehmende Ungleichheit der Alterseinkünfte und zunehmende Altersarmut?: Der Einfluss von Erwerbs- und Familienbiographien auf die Rentenhöhe in Deutschland," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 75(1), pages 108-130.
    14. Frank P. Stafford & Ngina S. Chiteji, 1999. "Portfolio Choices of Parents and Their Children as Young Adults: Asset Accumulation by African-American Families," American Economic Review, American Economic Association, vol. 89(2), pages 377-380, May.
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    18. Euwals, Rob & Eymann, Angelika & Borsch-Supan, Axel, 2004. "Who determines household savings for old age? Evidence from Dutch panel data," Journal of Economic Psychology, Elsevier, vol. 25(2), pages 195-211, April.
    19. Phipps, S.A. & Burton, P.S., 1992. "What's Mine is Yours?: The Influence of Male and Female Incomes on Patterns of Household Expenditure," Department of Economics at Dalhousie University working papers archive 92-12, Dalhousie, Department of Economics.
    20. Meier, Katja & Kirchler, Erich & Hubert, Angela-Christian, 1999. "Savings and investment decisions within private households: Spouses' dominance in decisions on various forms of investment," Journal of Economic Psychology, Elsevier, vol. 20(5), pages 499-519, October.
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    22. repec:zbw:rwirep:0150 is not listed on IDEAS
    23. Doss, Cheryl R., 1996. "Women'S Bargaining Power In Household Economic Decisions: Evidence From Ghana," Staff Papers 13517, University of Minnesota, Department of Applied Economics.
    24. Bourguignon, Francois & Chiappori, Pierre-Andre, 1992. "Collective models of household behavior : An introduction," European Economic Review, Elsevier, vol. 36(2-3), pages 355-364, April.
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