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Who is at the top? Wealth mobility over the life cycle

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Author Info

  • Hochguertel, Stefan

    ()
    (Department of Economics, VU University Amsterdam)

  • Ohlsson, Henry

    ()
    (Department of Economics)

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 accumulation. There are also limited precautionary motives for wealth accumulation when households experience income uncertainty.

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Bibliographic Info

Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number 2012:1.

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Length: 52 pages
Date of creation: 16 Jan 2012
Date of revision:
Handle: RePEc:hhs:uunewp:2012_001

Contact details of provider:
Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Email:
Web page: http://www.nek.uu.se/
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Related research

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

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References

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  1. Stefan Hochguertel & Henry Ohlsson, 2011. "Wealth mobility and dynamics over entire individual working life cycles," BCL working papers 56, Central Bank of Luxembourg.
  2. Vincenzo Quadrini, 1997. "Entrepreneurship, saving and social mobility," Discussion Paper / Institute for Empirical Macroeconomics 116, Federal Reserve Bank of Minneapolis.
  3. Tullio Jappelli & Luigi Pistaferri, 1999. "The Dynamics of Household Wealth Accumulation in Italy," CSEF Working Papers 27, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Dec 2000.
  4. Carroll, Christopher D. & Samwick, Andrew A., 1997. "The nature of precautionary wealth," Journal of Monetary Economics, Elsevier, vol. 40(1), pages 41-71, September.
  5. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December.
  6. Roine, Jesper & Waldenström, Daniel, 2007. "Wealth Concentration over the Path of Development: Sweden, 1873–2006," Working Paper Series 722, Research Institute of Industrial Economics, revised 13 Jun 2008.
  7. Davies, James B. & Shorrocks, Anthony F., 2000. "The distribution of wealth," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 11, pages 605-675 Elsevier.
  8. James B. Davies & Anthony Shorrocks & Edward N. Wolff, 2010. "The World Distribution of Household Wealth," Working Papers id:3217, eSocialSciences.
  9. Wojciech Kopczuk & Emmanuel Saez, 2004. "Top Wealth Shares in the United States: 1916-2000: Evidence from Estate Tax Returns," NBER Working Papers 10399, National Bureau of Economic Research, Inc.
  10. Thomas Piketty & Gilles Postel-Vinay & Jean-Laurent Rosenthal, 2005. "Wealth concentration in a developing economy : Paris and France, 1807-1994," Research Unit Working Papers 0504, Laboratoire d'Economie Appliquee, INRA.
  11. Karen E. Dynan & Jonathan Skinner & Stephen P. Zeldes, 2000. "Do the Rich Save More?," NBER Working Papers 7906, National Bureau of Economic Research, Inc.
  12. Klevmarken, Anders & Lupton, Joseph & Stafford, Frank, 2000. "Wealth Dynamics in the 1980’s and 1990’s: Sweden and the U.S," Working Paper Series 2000:18, Uppsala University, Department of Economics.
  13. Selin, Håkan, 2009. "The Rise in Female Employment and the Role of Tax Incentive. An Empirical Analysis of the Swedish Individual Tax Reform of 1971," Working Paper Series, Center for Fiscal Studies 2009:3, Uppsala University, Department of Economics.
  14. Richard H. Steckel & Jayanthi Krishnan, 2006. "THE WEALTH MOBILITY OF MEN AND WOMEN DURING THE 1960s AND 1970s," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(2), pages 189-212, 06.
  15. Nancy A. Jianakoplos & Paul L. Menchik, 1997. "Wealth Mobility," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 18-31, February.
  16. Waldenström, Daniel & Ohlsson, Henry & Roine, Jesper, 2007. "Long-Run Changes in the Concentration of Wealth: An Overview of Recent Findings," Working Paper Series 699, Research Institute of Industrial Economics.
  17. Shorrocks, A F, 1978. "The Measurement of Mobility," Econometrica, Econometric Society, vol. 46(5), pages 1013-24, September.
  18. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  19. Orazio P. Attanasio & Hilary W. Hoynes, 1995. "Differential Mortality and Wealth Accumulation," NBER Working Papers 5126, National Bureau of Economic Research, Inc.
  20. Anders Klevmarken, & Joseph P. Lupton & Frank P. Stafford, 2003. "Wealth Dynamics in the 1980s and 1990s: Sweden and the United States," Journal of Human Resources, University of Wisconsin Press, vol. 38(2).
  21. N. Anders Klevmarken, 2004. "On The Wealth Dynamics Of Swedish Families, 1984-98," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(4), pages 469-491, December.
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Cited by:
  1. Du Rietz, Gunnar & Henrekson, Magnus & Waldenström, Daniel, 2012. "The Swedish Inheritance and Gift Taxation, 1885–2004," Working Paper Series, Center for Fiscal Studies 2012:11, Uppsala University, Department of Economics.
  2. Ohlsson, Henry & Roine, Jesper & Waldenström, Daniel, 2014. "Inherited Wealth over the Path of Development: Sweden, 1810–2010," Working Paper Series 1033, Research Institute of Industrial Economics.

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