Understanding Why High Income Households Save More Than Low Income Households

This file is part of IDEAS, which uses RePEc data

Understanding Why High Income Households Save More Than Low Income Households

Author Info

Mark Huggett (Economics Department, University of Illinois)
Gustavo Ventura (Department of Economics, University of Illinois)

Additional information is available for the following registered author(s):

Abstract

This paper investigates why high income households save on average a higher fraction of income than do low income households in US cross-section data. The three explanations considered are (1) age differences across households, (2) temporary earnings shocks and (3) the structure of social security payments. We use a calibrated life-cycle model to evaluate the quantitative importance of these explanations. We find that age and the structure of social security payments are quantitatively important in replicating the pattern of average savings rates and income found in US cross-section data. Surprisingly, temporary shocks turn out to be of secondary importance.

Download Info
To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Publisher Info
Paper provided by Centro de Investigacion Economica, ITAM in its series Working Papers with number 9701.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 40 pages
Date of creation: Jan 1997
Date of revision:
Handle: RePEc:cie:wpaper:9701

Contact details of provider:
Postal: Camino a Sta. Teresa 930, Mexico, D.F. 10700
Phone: +525 628 4197
Fax: +525 628 4058
Email:
Web page: http://cie.itam.mx/
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Diego Dominguez).

Other versions of this item:

Article
- Huggett, Mark & Ventura, Gustavo, 2000. "Understanding why high income households save more than low income households," Journal of Monetary Economics, Elsevier, vol. 45(2), pages 361-397, April. [Downloadable!] (restricted)
Paper
- 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. [Downloadable!]

Find related papers by JEL classification:
D3 - Microeconomics - - Distribution
E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

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). [Downloadable!]
Ian Hathaway & Sameer Khatiwada, 2008. "Do financial education programs work?," Working Paper 0803, Federal Reserve Bank of Cleveland. [Downloadable!]
Maury Gittleman & Edward N. Wolff, 2000. "Racial Wealth Disparities: Is the Gap Closing?," Macroeconomics 0004058, EconWPA. [Downloadable!]
Other versions:
- Maury Gittleman & Edward N. Wolff, 2000. "Racial Wealth Disparities: Is the Gap Closing?," Economics Working Paper Archive 311, Levy Economics Institute, The. [Downloadable!]
- Edward N. Wolff, . "Racial Wealth Disparities Is the Gap Closing?," Economics Public Policy Brief Archive 66, Levy Economics Institute, The. [Downloadable!]
David Domeij & Paul Klein, 2002. "Private Pensions: To What Extent Do They Account for Swedish Wealth Inequality?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(3), pages 503-534, July. [Downloadable!] (restricted)
Martha A. Starr, 2006. "Macroeconomic dimensions of social economics: Saving, the stock market, and pension systems," Working Papers 2006-09, American University, Department of Economics. [Downloadable!]
Claudio Campanale, 2005. "Increasing Returns To Savings And Wealth Inequality," Working Papers. Serie AD 2005-20, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
Other versions:
- Claudio Campanale, 2005. "Increasing Returns to Saving and Wealth Inequality," CeRP Working Papers 45, Center for Research on Pensions and Welfare Policies, Turin (Italy). [Downloadable!]
- Claudio Campanale, 2007. "Increasing Returns to Savings and Wealth Inequality," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(4), pages 646-675, October. [Downloadable!] (restricted)
Fang Yang, 2005. "Accounting for the heterogeneity in retirement wealth," Working Papers 638, Federal Reserve Bank of Minneapolis. [Downloadable!]
Other versions:
- Fang Yang, . "Accounting for the Heterogeneity in Retirement Wealth," Working Papers, Center for Retirement Research at Boston College wp2009-6, Center for Retirement Research. [Downloadable!]
- Fang Yang, 2006. "Accounting for the Heterogeneity in Retirement Wealth," 2006 Meeting Papers 94, Society for Economic Dynamics. [Downloadable!]
Annamaria Lusardi & Jonathan Skinner & Steven F. Venti, 2001. "Saving Puzzles and Saving Policies in the United States," JCPR Working Papers 220, Northwestern University/University of Chicago Joint Center for Poverty Research.
Other versions:
- Annamaria Lusardi & Jonathan Skinner & Steven Venti, 2001. "Saving Puzzles and Saving Policies in the United States," NBER Working Papers 8237, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- A Lusardi & J Skinner & S Venti, 2001. "Saving puzzles and saving policies in the United States," Oxford Review of Economic Policy, Oxford University Press, vol. 17(1), pages 95-115, Spring.
Kazutoshi Miyazawa, 2005. "Growth and Inequality: A Demographic Explanation," STICERD - Distributional Analysis Research Programme Papers 75, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
Other versions:
- Kazutoshi Miyazawa, 2006. "Growth and inequality: a demographic explanation," Journal of Population Economics, Springer, vol. 19(3), pages 559-578, July. [Downloadable!] (restricted)
Kai Zhao, 2009. "Social Security, Differential Fertility, and the Dynamics of the Earnings Distribution," UWO Department of Economics Working Papers 20091, University of Western Ontario, Department of Economics. [Downloadable!]
Olovsson, Conny, 2004. "Social Security and the Equity Premium Puzzle," Seminar Papers 729, Stockholm University, Institute for International Economic Studies. [Downloadable!]
Francis, Johanna L., 2007. "Wealth and the Capitalist Spirit," MPRA Paper 5985, University Library of Munich, Germany. [Downloadable!]
Other versions:
- Johanna Francis, 2008. "Wealth and the Capitalist Spirit," Fordham Economics Discussion Paper Series dp2008-10, Fordham University, Department of Economics. [Downloadable!]
Francisco Alvarez-Cuadrado & Ngo Van Long, 2008. "The Relative Income Hypothesis," CIRANO Working Papers 2008s-18, CIRANO. [Downloadable!]
Francisco Alvarez-Cuadrado & Ngo Van Long, 2008. "A Permanent Income Version of the Relative Income Hypothesis," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Francesc Obiols-Homs & Carlos Urrutia, 2004. "Transitional Dynamics and the Distribution of Assets," Macroeconomics 0407020, EconWPA. [Downloadable!]
Other versions:
- Francesc Obiols-Homs & Carlos Urrutia, 2005. "Transitional dynamics and the distribution of assets," Economic Theory, Springer, vol. 25(2), pages 381-400, 02. [Downloadable!] (restricted)

Statistics

Access and download statistics

Did you know? About 2700 working paper series are listed on RePEc.

This page was last updated on 2009-11-25.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.