From Patriarchy to Partnership: Gender Equality and Household Finance
54 Pages Posted: 17 Aug 2020
Date Written: July 15, 2020
Using Italian survey data, we document a marked shift in household financial decision-making power from men to women. The share of wife-headed households increased from almost zero in the early 1990s to over 35% in recent years. This reflects a slow but steady social norm transformation that changed family governance from a patriarchal system to an egalitarian one. We use the variation of social norms across cohorts and regions to identify the effects of gender equality on household financial decisions. We find that more gender-neutral norms have a positive effect on household participation in financial markets, equity holdings, and asset diversification; these effects are stronger when the benefits from information and cost sharing between spouses are larger. Importantly, equality increases returns from financial investments. Taken all together, this evidence suggests that gender roles in household financial management can have large economic costs. Consistent with this, we show that the patriarchal system began to be abandoned when a pension reform in the early 1990s made it too costly for the younger cohorts to comply with traditional roles.
Keywords: Household Finance, Social Norms, Gender Equality
JEL Classification: D14, G11, G41
Suggested Citation: Suggested Citation