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We quantify how bargaining power is distributed when spouses make financial decisions together. We build a model in which each spouse has a risk preference and must bargain with each other to make asset decisions for the household. By structurally estimating the model with longitudinal data from Australian households, we show that the average household's asset allocation reflects the husband's risk preference 44% more than the wife's. This gap in bargaining power is partially explained by gender differences in income and employment status, but is also due to gender effects. We provide further evidence that links the distribution of bargaining power to views on gender norms in the cross-section.
Authors
Research Associate University of Essex
Ran is an IFS Research Associate and a Lecturer at the University of Essex interested in understanding household and firm behaviour.
Cameron Peng
Weilong Zhang
Working Paper details
- DOI
- 10.1920/wp.ifs.2021.1121
- Publisher
- Institute for Fiscal Studies
Suggested citation
R, Gu and C, Peng and W, Zhang. (2021). The gender gap in household bargaining power: a portfolio-choice approach. London: Institute for Fiscal Studies. Available at: https://ifs.org.uk/publications/gender-gap-household-bargaining-power-portfolio-choice-approach (accessed: 20 April 2024).
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