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Private Pensions: To What Extent Do They Account for Swedish Wealth Inequality?

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Author Info

  • David Domeij

    (Stockholm School of Economics)

  • Paul Klein

    (Univeristy of Western Ontario)

Abstract

Sweden's distribution of disposable income is very even, with a Gini coefficient of just 0.31. Yet, the wealth distribution is extremely unequal, with a Gini coefficient of 0.79. Moreover, Swedish wealth inequality is to a very large extent driven by the large fraction of households with zero or negative wealth. In this paper, we ask to what extent the resditributive public pension scheme is responsible for these features of the data. To address this question, we study the properties of two overlapping generations economies with uninsurable idiosyncratic risk. The first has a pension system modeled o the actual one, the second has no public pension scheme at all. Our findings support the view that the public pension scheme is to a large extent responsible for the features of the data that we focus on. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1006/redy.2002.0157
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Bibliographic Info

Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 5 (2002)
Issue (Month): 3 (July)
Pages: 503-534

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Handle: RePEc:red:issued:v:5:y:2002:i:3:p:503-534

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Related research

Keywords: Inequality; public pensions; Sweden;

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References

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  1. Martin Floden, 2000. "The Effectiveness of Government Debt and Transfers as Insurance," Econometric Society World Congress 2000 Contributed Papers 1013, Econometric Society.
  2. S. Rao Aiyagari, 1993. "Uninsured idiosyncratic risk and aggregate saving," Working Papers 502, Federal Reserve Bank of Minneapolis.
  3. Mark Huggett & Gustavo Ventura, 1997. "Understanding Why High Income Households Save More Than Low Income Households," Working Papers 9701, Centro de Investigacion Economica, ITAM.
  4. Vincenzo Quadrini, 1997. "Entrepreneurship, saving and social mobility," Discussion Paper / Institute for Empirical Macroeconomics 116, Federal Reserve Bank of Minneapolis.
  5. Domeij, David & Floden, Martin, 2001. "The labor-supply elasticity and borrowing constraints: Why estimates are biased," Working Paper Series in Economics and Finance 480, Stockholm School of Economics.
  6. Mariacristina De Nardi, 1999. "Wealth inequality, intergenerational links and estate taxation," Working Paper Series WP-99-13, Federal Reserve Bank of Chicago.
  7. Huggett, Mark, 1996. "Wealth distribution in life-cycle economies," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 469-494, December.
  8. Domeij, David & Heathcote, Jonathan, 2001. "Factor Taxation with Heterogeneous Agents," Working Papers 01-07, Duke University, Department of Economics.
  9. Luis Cubeddu & Jose-Victor Rios-Rull, 1997. "Marital risk and capital accumulation," Staff Report 235, Federal Reserve Bank of Minneapolis.
  10. Vincenzo Quadrini & José-Víctor Ríos-Rull, 1997. "Understanding the U.S. distribution of wealth," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 22-36.
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Citations

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Cited by:
  1. Claudio Campanale, 2005. "Increasing Returns To Savings And Wealth Inequality," Working Papers. Serie AD 2005-20, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  2. Claudio Campanale, 2008. "Life-Cycle Portfolio Choice: The Role of Heterogeneity and Under-diversification," Working Papers. Serie AD 2008-06, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  3. Jean-Olivier Hairault & François Langot, 2008. "Inequality and Social Security Reforms," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00270290, HAL.
  4. repec:hal:journl:halshs-00270290 is not listed on IDEAS
  5. David Domeij & Martin Floden, 2010. "Inequality Trends in Sweden 1978-2004," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 179-208, January.
  6. Mark Hugget & Gustavo Ventura & Amir Yaron, 2002. "Human Capital and Earnings Distribution Dynamics," NBER Working Papers 9366, National Bureau of Economic Research, Inc.
  7. Ingvild Almås & Magne Mogstad, 2009. "Older or Wealthier? The Impact of Age Adjustments on the Wealth Inequality Ranking of Countries," Discussion Papers 583, Research Department of Statistics Norway.
  8. Domeij David & Johannesson Magnus, 2006. "Consumption and Health," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(1), pages 1-30, May.
  9. Hans Fehr & Manuel Kallweit & Fabian Kindermann, 2013. "Families and social security," EcoMod2013 5280, EcoMod.
  10. Olovsson, Conny, 2004. "Social Security and the Equity Premium Puzzle," Seminar Papers 729, Stockholm University, Institute for International Economic Studies.

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