Summary
Widowhood and retirement change the economie environment of elderly households. While retirement changes income and expenditure patterns, widowhood fundamentally changes the structure of the household. Besides high non-monetary cost of losing the partner, resources are no longer shared and economies of scale arising from joint consumption are lost. This paper applies a collective household model to expenditure data on elderly households in Switzerland. The findings suggest that 44% of household resources are assigned to wives and both spouses save roughly 27% or, on average, 800 Swiss Francs on monthly expenditures relative to living apart. Estimates of indifference scales indicate that men suffer a financial loss after losing their wife, while widowed women do not.
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The views expressed do not necessarily reflect those of CONCORDIA Versicherungen AG.
I am grateful to two anonymous referees, Aline Bütikofer, Michael Gerfin, Boris Kaiser, Kaspar Wüthrich, and seminar participants at the University of Bern for helpful suggestions and com-ments. All errors are my own. Financial support from the Swiss National Science Foundation (Grant 100018135379) is gratefully acknowledged.
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Burkhard, D. Allocation of Expenditures in Elderly Households and the Cost of Widowhood. Swiss J Economics Statistics 153, 371–401 (2017). https://doi.org/10.1007/BF03399512
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DOI: https://doi.org/10.1007/BF03399512