Control over Money and Wealth Accumulation in Canadian Families – revised version: Control over Money and the Savings Decisions of Canadian Households (with Shelley Phipps)

It is well known that, in most countries, men have more life insurance than do women, and are more likely to be members of private pension plans. However much less is known about men’s and women’s personal asset holdings. Do private savings counterbalance the inequality in pension access? Or do they exacerbate existing inequalities? Inequality in wealth ownership is of interest as both an outcome and determinant of intra-household resource allocation. Asset holdings reflect decisions made within households about how much to save and the form savings will take. Yet, given that current savings lead to higher levels of future investment income, the decision as to who owns an asset may influence each spouse’s future bargaining position. Government-sponsored savings schemes may ameliorate or exacerbate inequality in wealth ownership within the family. To the extent that tax savings from such schemes are greater for earners with higher marginal tax rates, there is an incentive to concentrate contributions on the higher income earner. On the other hand, limitations on each individual’s total contributions mean that it can be advantageous to spread contributions between spouses for the purposes of future income splitting or to maximize total contributions. In this paper we take advantage of a unique dataset collected by one of the authors on how households manage their finances. The sample is comprised of 300 couples with children in the Ottawa-Gatineau region in Canada. The dataset includes conventional socioeconomic variables, detailed information on savings decisions, and also more sociological variables examining the nature of household financial management (Who decides?). With our dataset we are able to examine the effect of women’s and men’s control over finances on saving decisions. Interestingly, we find a negative relationship between female control and the extent of savings; one that persists across various measures of control over decision-making, and after we control for a variety of economic and demographic characteristics.