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Relative Wages in Aging America: Defined Contribution Wealth Inequality: Role of Earnings Shocks, Portfolio Choice, and Employer Contributions

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In the two years after the Great Recession of 2007à 2009, 64 percent of workers at the top of the earnings distribution, compared to 56 percent of those at the bottom, experienced increases in defined contribution (DC) retirement wealth. We condition DC wealth accumulation on workersÕ position in the earnings distribution using a unique 2-year panel (2009-2011) from the Survey of Income and Program Participation (SIPP). Earnings losses of 10 percent or more in a personÕs career; non-employment spells; lower employer contributions; and having less diversified portfolios barely affect earners in the top 10 percent of the earnings distribution, but are associated with less DC wealth accumulation for those at the bottom. These differences may contribute to a growing retirement wealth gap.

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  • Teresa Ghilarducci & Joelle Saad-Lessler & Gayle Reznik, 2017. "Relative Wages in Aging America: Defined Contribution Wealth Inequality: Role of Earnings Shocks, Portfolio Choice, and Employer Contributions," SCEPA working paper series. 2017-06, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    • Handle: RePEc:epa:cepawp:2017-08
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    More about this item

    Keywords

    Defined contribution pensions; retirement wealth inequality;

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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