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Who is at the Top? Wealth Mobility over the Life Cycle

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  • Stefan Hochguertel

    (VU University Amsterdam)

  • Henry Ohlsson

    (Uppsala University)

Abstract

Who is wealthy? This paper presents empirical estimates of household movements into and out of the top percents of the wealth distribution over individual life cycles. There are life-cycle motives and precautionary motives for wealth accumulation. The opportunities to accumulate wealth create incentives for education, work effort, and entrepreneurship. We would expect considerable wealth mobility over the life cycle if the life-cycle motives and incentives to accumulate are strong and affect behavior. The data are from an administrative Swedish source that retains wealth information from tax registers. The data are unique, they follow a large sample of households over almost 40 years. There is substantial mobility when we follow individual households over long enough time spans. We find that wealth mobility increased until the end of the 1980s and then started to decrease. Age-wealth probability profiles are consistent with life-cycle motives for wealth ac cumulation. There are also limited precautionary motives for wealth accumulation when households experience income uncertainty.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 12-004/3.

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Date of creation: 16 Jan 2012
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Handle: RePEc:dgr:uvatin:20120004

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Keywords: intragenerational wealth mobility; wealth durations; life-cycle motives; precautionary motives; panel data;

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Cited by:
  1. Henrekson, Magnus & Du Rietz, Gunnar & Waldenström, Daniel, 2012. "The Swedish Inheritance and Gift Taxation, 1885–2004," Working Paper Series, Research Institute of Industrial Economics 936, Research Institute of Industrial Economics.
  2. Ohlsson, Henry & Roine, Jesper & Waldenström, Daniel, 2014. "Inherited Wealth over the Path of Development: Sweden, 1810–2010," Working Paper Series, Research Institute of Industrial Economics 1033, Research Institute of Industrial Economics.

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