From Patriarchy to Partnership: Gender Equality and Household Finance

Abstract

We estimate a novel measure of gender norms on intra-household financial decision making by leveraging dramatic variation across Italian cohorts and regions in the gender of the spouse in charge of household finances that occurred over the last 30 years. We use these estimates to identify the effects of gender parity on household financial decisions. We find that more egalitarian norms increase household participation in financial markets, equity holdings and asset diversification. Egalitarian couples earn higher returns on investments which can raise wealth at retirement up to 15% compared to couples that strictly comply with patriarchal norms. This evidence suggests that gender roles in household financial management can have large economic costs. Consistent with this view, we show that patriarchal norms began receding in the early 1990s, when a pension reform made it too costly to comply with traditional roles.