Health, Wealth and Gender: Do Health Shocks of Husbands and Wives Have Different Impacts on Household Wealth?

The extent to which men’s versus women’s health affects household wealth and the mechanisms through which these effects occur have important implications for the welfare of older individuals living with a spouse, and in particular for women who are likely to outlive their husbands by several years. Intermediate mechanisms through which individual health shocks may affect household wealth are discussed. Four waves of HRS data on married couples are used to estimate the direct effect of onset of various health conditions on household wealth, with these effects allowed to differ for husbands and wives. Estimates using only wave 2 health shocks (controlling for baseline health) indicate that the impact of a health shock to the wife has a larger negative impact than a health shock to the husband, which is consistent with prior work. Estimates in which health shocks from waves 2-4 are allowed for produce conflicting results. Further research is required to ascertain the reason for this apparent conflict.

Out of the Wallet and into the Purse: Using Micro Data to Test Income Pooling

Unitary models, assuming a single objective function and unified budget constraint, are traditionally used to model household behavior. Most empirical tests of unitary models rely on endogenous regressors. This paper uses an exogenous change in the intrahousehold distribution of income, provided by a change in U.K. Family Allowance policy. Expenditure shares are estimated for a wide range of goods. Shifts in expenditure shares for assignable goods, such as men’s clothing, children’s clothing, and men’s tobacco, suggest that children benefited at the expense of men when this policy change shifted income within households from men to women.income pooling; intrahousehold allocation; child benefit; collective model; unitary model; family policy; household demand

Saving for Retirement: Household Bargaining and Household Net Worth

Traditional economic models of savings treat the household as a single individual, and do not allow for the separate preferences of and possible conflicts of interest between husbands and wives. Since wives are typically younger than their husbands and life expectancy for women exceeds that for men, wives may prefer to save more for retirement than do their husbands. This suggests that households in which wives have greater relative bargaining power may accumulate greater net worth as they approach retirement. We explore the importance of bargaining in marriages of older couples by examining the empirical relationship between the net worth of couples in the first wave of the Health and Retirement Survey and factors that may affect the relative bargaining power of husbands and wives, such as control over income sources, relative age, and relative education. We find that measures of long-term relative bargaining power of wives have a positive effect on the household's wealth, even when controlling for other factors. In general, the realized effects of reforms intended to increase private saving for retirement may depend on how these reforms affect household bargaining relationships, as well as how they affect individual incentives to save.

The Impact of Separate Taxation on the Intra-Household Allocation of Assets: Evidence from the UK

The income tax system in the United Kingdom moved from joint to independent taxation of husbands' and wives' income in 1990. One interesting aspect of independent taxation is the ability for households to choose the division of household assets between the two spouses. This tax reform therefore creates an opportunity for households to engage in a form of tax avoidance by shifting their investment income to the spouse with the lower marginal tax rate. We use Family Expenditure Survey data to examine the impact of this tax reform on the magnitude of investment income shifting between spouses with different marginal tax rates. We find a sizeable shift in the share and incidence of asset income claimed by wives, who typically have lower marginal tax rates, as well as in the incidence of the wife claiming all the household asset income, indicating that households responded to this policy change by reallocating asset ownership.

Saving for Retirement: Household Bargaining and Household Net Worth

Traditional economic models treat the household as a single individual, and do not allow for separate preferences of and possible conflicts of interest between husbands and wives. Since wives are typically younger than their husbands and life expectancy for women exceeds that for men, wives may prefer to save more for retirement than do their husbands. This suggests that households in which wives have greater relative bargaining power may accumulate greater net worth as they approach retirement. Most empirical models of net worth in the literature do not include characteristics of both spouses. We present a more complete unitary model of household net worth and find, among couples in the first wave of the Health and Retirement Survey, that the characteristics of both husband and wife are determinants of net worth. We explore the importance of bargaining in marriages of older couples by examining the empirical relationship between their net worth and factors such as relative control over current income sources, relative age, and relative education. We find some evidence that low relative education of wives is associated with low net worth.

Health, Wealth and Gender: Do Health Shocks of Husbands and Wives Have Different Impacts on Household Wealth?

The extent to which men’s versus women’s health affects household wealth and the mechanisms through which these effects occur have important implications for the welfare of older individuals living with a spouse, and in particular for women who are likely to outlive their husbands by several years. Intermediate mechanisms through which individual health shocks may affect household wealth are discussed. Four waves of HRS data on married couples are used to estimate the direct effect of onset of various health conditions on household wealth, with these effects allowed to differ for husbands and wives. Estimates using only wave 2 health shocks (controlling for baseline health) indicate that the impact of a health shock to the wife has a larger negative impact than a health shock to the husband, which is consistent with prior work. Estimates in which health shocks from waves 2-4 are allowed for produce conflicting results. Further research is required to ascertain the reason for this apparent conflict.Social Security Administrationhttp://deepblue.lib.umich.edu/bitstream/2027.42/50604/1/wp016.pd

Out of the Wallet and into the Purse: Using Micro Data to Test Income Pooling

This paper uses an exogenous change in the intrahousehold distribution of income, provided by a change in United Kingdom Family Allowance policy to test the income-pooling hypothesis implied by unitary household models. Expenditure shares are estimated for a wide range of goods using household-level data. Shifts in expenditure shares suggest that children and mothers benefited at the expense of fathers when this policy change shifted income within households from men to women. Similar shifts are not found among married-couple households with no children. This paper refutes income pooling, and confirms and extends results in Lundberg, Pollak, and Wales (1997).