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The Effects of Schooling on Wealth Accumulation Approaching Retirement

Author

Listed:
  • Bingley, Paul

    (SFI - The Danish National Centre for Social Research)

  • Martinello, Alessandro

    (Department of Economics, Lund University)

Abstract

Education and wealth are positively correlated for individuals approaching retirement, but the direction of the causal relationship is ambiguous in theory and has not been identified in practice. We combine administrative data on individual total wealth with a reform expanding access to lower secondary school in Denmark in the 1950s, finding that schooling increases pension annuity claims but reduces the non-pension wealth of men in their 50's. These effects grow stronger as normal retirement age approaches. Labour market mechanisms are key, with schooling increasing job mobility, reducing housing equity, increasing leverage, and improving occupational pension benefits.

Suggested Citation

  • Bingley, Paul & Martinello, Alessandro, 2017. "The Effects of Schooling on Wealth Accumulation Approaching Retirement," Working Papers 2017:9, Lund University, Department of Economics.
    • Handle: RePEc:hhs:lunewp:2017_009
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    File URL: http://project.nek.lu.se/publications/workpap/papers/wp17_9.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Education; Wealth; Labour market mechanisms; Pensions; Housing equity; Portfolio composition; Instrumental variable;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education

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