Understanding why high income households save more than low income households
AbstractThis paper investigates why high income households in the United States save on average more than low income households in cross-section data. The three explanations considered are (1) age differences across households, (2) temporary earnings shocks, and (3) the structure of transfer payments. We use a calibrated life-cycle model to evaluate the quantitative importance of these explanations and find that age and the structure of transfers are quantitatively important in producing the cross-section pattern of United States savings rates. Temporary shocks are of secondary importance.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Monetary Economics.
Volume (Year): 45 (2000)
Issue (Month): 2 (April)
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Web page: http://www.elsevier.com/locate/inca/505566
Other versions of this item:
- Mark Huggett & Gustavo Ventura, 1995. "Understanding why high income households save more than low income households," Discussion Paper / Institute for Empirical Macroeconomics 106, Federal Reserve Bank of Minneapolis.
- Mark Huggett & Gustavo Ventura, 1997. "Understanding Why High Income Households Save More Than Low Income Households," Working Papers 9701, Centro de Investigacion Economica, ITAM.
- D3 - Microeconomics - - Distribution
- E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
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