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Wealth Distribution within Couples and Financial Decision Making

Diskussionspapiere extern

Markus M. Grabka, Jan Marcus, Eva Sierminska

Esch-sur-Alzette: CEPS/INSTEAD, 2013, 26 S.
(Working Papers / CEPS/INSTEAD ; 2013-02)

Abstract

While most studies on wealth inequality focus on the inequality between households, this paper examines the distribution of wealth within couples. For this purpose, we make use of unique individual level micro data from the German Socio-Economic Panel (SOEP). In married and cohabiting couples, men have, on average, 33,000 Euro more net worth than women. We look at five different sets of factors (demographics, income, labor market, inheritances, financial decision making in the partnership) that might explain this wealth gap. We find that all factors contribute to the explanation of the wealth gap within partnerships, with inheritances and income being particularly relevant. Furthermore, we find that specific characteristics (e.g. self-employment, no migration background, inheritances, high income) that decrease the wealth gap for women increase it for men. For men the respective coefficients are even stronger in absolute terms. When examining intra-partnership financial decision making, we find the gap to be significantly smaller when the female manages the money and larger if the male partner has the last word in financial decisions.

Jan Marcus

Assistant Professor in the Education and Family Department

Markus M. Grabka

Board of Directors SOEP & Acting Division Head Knowledge Transfer in the German Socio-Economic Panel study Department



JEL-Classification: J2;D13;D31;D69;I31
Keywords: Wealth gap, Wealth inequality, Intra-household allocation, Gender, Financial decision making, SOEP
Externer Link:
http://www.ceps.lu/?type=module&id=104&tmp=1919

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