Intra-household allocation of non-mandatory retirement savings

Christoph Metzger

No 64, FZG Discussion Papers from University of Freiburg, Research Center for Generational Contracts (FZG)

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.

Keywords: savings; intra-household allocation; retirement; life-cycle; unitary model; savings; three-stage least squares (search for similar items in EconPapers)
JEL-codes: D14 D91 H31 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-age and nep-eur
Note: Updated version of Discussion Paper No. 60.
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Journal Article: Intra-household allocation of non-mandatory retirement savings (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fzgdps:64

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