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Home Publications The gender gap in household bargaining power: a portfolio-choice approach

The gender gap in household bargaining power: a portfolio-choice approach

Ran Gu, Cameron Peng and Weilong Zhang
IFS Working Paper W21/11

We quantify how bargaining power is distributed when spouses make financial decisions together. We build a model in which each spouse has a risk preference and must bargain with each other to make asset decisions for the household. By structurally estimating the model with longitudinal data from Australian households, we show that the average household's asset allocation reflects the husband's risk preference 44% more than the wife's. This gap in bargaining power is partially explained by gender differences in income and employment status, but is also due to gender effects. We provide further evidence that links the distribution of bargaining power to views on gender norms in the cross-section.