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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. Therefore we analyze the intra-household allocation of retirement savings between partners in Germany taking an individualistic approach.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 savings amounts between spouses, probably due to some "peer effect". The unitary model of household decision making can thus be rejected with respect to retirement savings.

Suggested Citation

  • Metzger, Christoph, 2017. "Intra-household allocation of non-mandatory retirement savings," FZG Discussion Papers 64, University of Freiburg, Research Center for Generational Contracts (FZG).
    • Handle: RePEc:zbw:fzgdps:64
    Note: Updated version of Discussion Paper No. 60.
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    Cited by:

    1. Altmann Kristina & Bernard René & Le Blanc Julia & Gabor-Toth Enikö & Hebbat Malik & Kothmayr Lisa & Schmidt Tobias & Tzamourani Panagiota & Werner Daniel & Zhu Junyi, 2020. "The Panel on Household Finances (PHF) – Microdata on household wealth in Germany," German Economic Review, De Gruyter, vol. 21(3), pages 373-400, September.
    2. Marie-Hélène BROIHANNE, 2021. "Testing the gender gap in subjective financial literacy of spouses," Working Papers of LaRGE Research Center 2021-08, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.

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    More about this item

    Keywords

    savings; intra-household allocation; retirement; life-cycle; unitary model; savings; three-stage least squares;
    All these keywords.

    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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