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Accounting for the Heterogeneity in Retirement Wealth

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  • Fang Yang

Abstract

This paper studies a quantitative dynamic general equilibrium life-cycle model where parents and their children are linked by bequests, both voluntary and accidental, and by the transmission of earnings ability. This model is able to match very well the empirical observation that households with similar lifetime earnings hold very different amounts of wealth at retirement. Earnings heterogeneity and borrowing constraints are essential in generating the variation in wealth at retirement among low lifetime earnings households, while inheritance heterogeneity helps to generate the heterogeneity in wealth at retirement among high lifetime earnings households.

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File URL: http://crr.bc.edu/working-papers/accounting-for-the-heterogeneity-in-retirement-wealth/
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Bibliographic Info

Paper provided by Center for Retirement Research in its series Working Papers, Center for Retirement Research at Boston College with number wp2009-6.

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Length: 41 pages
Date of creation: Jan 2009
Date of revision: Mar 2009
Handle: RePEc:crr:crrwps:wp2009-6

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Cited by:
  1. Cagetti, Marco & De Nardi, Mariacristina, 2008. "Wealth Inequality: Data And Models," Macroeconomic Dynamics, Cambridge University Press, vol. 12(S2), pages 285-313, September.
  2. James MacGee & Jie Zhou, 2010. "Private Pensions, Retirement Wealth and Lifetime Earnings," University of Western Ontario, Economic Policy Research Institute Working Papers 20102, University of Western Ontario, Economic Policy Research Institute.
  3. Fang Yang, 2012. "Social Security Reform with Impure Intergenerational Altruism," Discussion Papers 12-01, University at Albany, SUNY, Department of Economics.

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