Does the Balance of Power within a Family Matter? The Case of the Retirement Equity Act

39 Pages Posted: 24 Sep 2002

See all articles by Saku Aura

Saku Aura

University of Missouri at Columbia - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: May 2002

Abstract

This paper studies within-family decision making regarding investment in income protection for surviving spouses. A change in US pension law (the Retirement Equity Act of 1984) is used as an instrument to derive predictions both from a simple Nash-bargaining model of the household and from the classical single-utility-function model of the household. This law change gave spouses of married pension-plan participants the right to survivor benefits unless they explicitly waived this right. The predictions of the classical model are rejected in favor of the predictions of the Nash-bargaining model in the data.

JEL Classification: D1, J1

Suggested Citation

Aura, Saku, Does the Balance of Power within a Family Matter? The Case of the Retirement Equity Act (May 2002). Available at SSRN: https://ssrn.com/abstract=318352 or http://dx.doi.org/10.2139/ssrn.318352

Saku Aura (Contact Author)

University of Missouri at Columbia - Department of Economics ( email )

118 Professional Building
Columbia, MO 65211
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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