Determinants and Consequences of Bargaining Power in Households

43 Pages Posted: 24 Jul 2006 Last revised: 29 Sep 2006

See all articles by Leora Friedberg

Leora Friedberg

University of Virginia - Department of Economics; National Bureau of Economic Research (NBER)

Anthony Webb

Boston College - Center for Retirement Research

Date Written: July 2006

Abstract

A growing literature offers indirect evidence that the distribution of bargaining power within a household influences decisions made by the household. The indirect evidence links household outcomes to variables that are assumed to influence the distribution of power within the household. In this paper, we have data on whether a husband or wife in the Health and Retirement Study %u201Chas the final say%u201D when making major decisions in a household. We use this variable to analyze determinants and some consequences of bargaining power. Our analysis overcomes endogeneity problems arising in many earlier studies and constitutes a missing link confirming the importance of household bargaining models.We find that decision-making power depends on plausible individual variables and also influences important household outcomes, with the second set of results much stronger than the first set. Current and lifetime earnings have significant but moderate effects on decision-making power. On the other hand, decision-making power has important effects on financial decisions like stock market investment and total wealth accumulation and may help explain, for example, the relatively high poverty rate among widows.

Suggested Citation

Friedberg, Leora and Webb, Anthony, Determinants and Consequences of Bargaining Power in Households (July 2006). NBER Working Paper No. w12367. Available at SSRN: https://ssrn.com/abstract=918965

Leora Friedberg (Contact Author)

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States
804-924-3225 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Anthony Webb

Boston College - Center for Retirement Research ( email )

Fulton Hall 550
Chestnut Hill, MA 02467
United States

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