Marriage, the Sharing Rule, and Pocket Money: The Case of South Korea

Abstract

Using longitudinal data on private consumption from South Korea, this article examines the marital balance of power between spouses in a dynamic setting by allowing for unobserved heterogeneity at the household level and spouses’ time‐constant unobserved bargaining power. I find that unobserved power plays a significant role in intrahousehold resource allocation. The income pooling hypothesis is no longer rejected after accounting for unobserved power. Relative spousal earnings may be a good proxy for the long‐term balance of power to an extent that cross‐sectional variation in relative earnings across households reflects the pattern of spousal matching. However within‐marriage changes in relative earnings do not induce any significant resource transfer between spouses. The balance of bargaining power is stable within marriage.