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Intra-household allocation of non-mandatory retirement savings

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  • Metzger, Christoph

Abstract

Traditionally, households have been seen as acting as a single unit when it comes to savings. Although this might be correct for some parts of household savings, we question the correctness of the unitary model with respect to non-mandatory retirement savings. To answer this question we analyze the intra-household allocation of retirement savings between partners in Germany. First, the decision to save at all is analyzed using a seemingly unrelated bivariate probit model, showing that the possession of retirement saving accounts among spouses is positively correlated, hinting at a 'crowding-in' of saving accounts. However, this could be only due to some tax reasons. Thus, we analyze additionally the interaction of savings between spouses using three-stage least squares, allowing for endogeneity between the spouse's savings. These results additionally show a 'crowding-in' of total retirement saving amounts between spouses, probably due to some 'recognition effect'. The unitary model of household decision making can thus be rejected with respect to retirement savings.

Suggested Citation

  • Metzger, Christoph, 2016. "Intra-household allocation of non-mandatory retirement savings," FZG Discussion Papers 60, University of Freiburg, Research Center for Generational Contracts (FZG).
  • Handle: RePEc:zbw:fzgdps:60
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    More about this item

    Keywords

    savings; intra-household allocation; retirement; life-cycle; unitary model; household decision; three-stage least squares;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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