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Intra-household allocation of non-mandatory retirement savings

Christoph Metzger

No 60, 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. 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.

Keywords: savings; intra-household allocation; retirement; life-cycle; unitary model; household decision; three-stage least squares (search for similar items in EconPapers)
JEL-codes: D14 D91 H31 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-age and nep-eur
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Related works:
Journal Article: Intra-household allocation of non-mandatory retirement savings (2018) Downloads
Working Paper: Intra-household allocation of non-mandatory retirement savings (2017) Downloads
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