The Gender Gap in Financial Security: What We Know and Don't Know about Australian Households

Abstract

This study investigates the gender wealth gap in Australia by examining differences in the net worth of households headed by single women and men, using data from the 2006 Household, Income and Labour Dynamics in Australia (HILDA) Survey. It demonstrates that the gender wealth gap is concentrated in particular types of assets, and differences in the composition of wealth, especially in high net worth households, are an important feature of the wealth gap in Australia. Using decomposition techniques within a quantile regression framework, the study explores the effects of individual characteristics of single male and female households on their wealth and finds that individual factors play a relatively small role in accounting for the large gender wealth gap at the top of the wealth distribution. Therefore, differences in the composition of men and women's wealth portfolios contribute to the gender wealth gap, and future research must account for these differences. INTRODUCTION Wealth is an important determinant of financial security. Accumulated assets can assist with smoothing consumption across the life cycle and provide a buffer against life's emergencies. These assets can generate current services such as accommodation; contribute income such as rent, interest, and dividends; provide collateral when credit is required; be converted to cash to support current consumption; and satisfy motivations to leave a bequest (Carmen Diana Deere and Cheryl R. Doss 2006). However, when Deere and Doss (2006) summarized international research in the field, they concluded that there is little evidence overall for the gender differences in wealth Just four of the studies they identified utilized national-level data for the purposes of estimating the presence and size of a gender wealth gap and all were included in the same issue of Feminist Economics as Deere and Doss's review (John Gibson,

Understanding the Gender Gap in Financial Literacy: Evidence from Australia

“…Future research might also fruitfully examine the link between the set of assets in a wealth portfolio and financial literacy. For example, within Australia property assets play a dominant role in the wealth portfolios of women (Austen et al, 2014). It may be the case that beyond investing in the primary home women have little incentive or exposure to other investment options and that this, in turn, affects their financial literacy.…”

Inequalities and the individualization of wealth

“…This evolution is rather surprising, because gender gaps have been found to be decreasing in education (Schwartz and Han, 2014;DiPrete and Buchmann, 2006), the labor supply, and income (Garbinti et al, 2018). The role of various determinants in explaining the gender wealth gap has been explored in the literature: earnings (Bonnet et al, 2014;Grabka et al, 2015;Sierminska et al, 2018), occupations (Austen et al, 2014), savings (Chang, 2010;Lersch, 2017), or preferences (Cartwright, 2011). On the other hand, Edlund and Kopczuk (2009) postulate that women's wealth is mostly inherited, as opposed to self-made wealth, therefore using the share of women in the top deciles as a proxy for the importance of inherited wealth.…”

Wealth, Savings and Children Among Swiss, German and Australian Families

“…A simulation study by Love (2010) using the Panel Study of Income Dynamics in the USA indicates that households with children accumulate substantially less wealth during the working years, but, probably out of a bequest motive, save more during retirement and end with more savings than households that have never had children. The effects might be different for some family types, particularly for single parents (Austen et al 2014). Controlling for other factors, the results from Switzerland indicate that single mothers have 17,890 CHF less in non-housing wealth than childless single women (Ravazzini and Chesters 2018).…”