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Life-Cycles in Income and Wealth

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Author Info
J. R. Kearl
Clayne L. Pope
Abstract

Using panel data for a sample of households in Utah from 1850 to 1900 we find income and wealth age profiles that are concave and that have a peak within the age distribution of the relevant sample. This finding holds for cross sections at five-year intervals, for pooled cross section time-series data, for cohort data, for households when individual differences are accounted for with a variance-components model and when we account for vintage measured as duration within the economy.We also find a relationship between age-income and age-wealth profiles that is consistent with a life-cycle model of consumption given a concave and peaked age-income profile: households accumulate and then begin to draw down wealth holdings, the age-wealth profile consistently peaks at an age later than the age-income profile for the same households, and the age-wealth profile for young households is considerably steeper than is the age-income profile.We have data, then, that in many respects appear to be capable of having been generated by individual decisions in a contemporary economy.This is particularly interesting since the data were, in fact, generated within a very different economy, one where formal education, on-the-job training and labor-leisure choices were probably considerably less important than in a contemporary economy.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1146.

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Date of creation: Jun 1983
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Handle: RePEc:nbr:nberwo:1146

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Nancy D. Ruggles & Richard Ruggles, 1977. "The Anatomy of Earnings Behavior," NBER Chapters, in: Distribution of Economic Well-Being, pages 115-162 National Bureau of Economic Research, Inc. [Downloadable!]
  2. John B. Lansing & John Sonquist, 1969. "A Cohort Analysis of Changes in the Distribution of Wealth," NBER Chapters, in: Six Papers on the Size Distribution of Wealth and Income, pages 31-74 National Bureau of Economic Research, Inc. [Downloadable!]
  3. Heckman, James J, 1976. "A Life-Cycle Model of Earnings, Learning, and Consumption," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S11-44, August. [Downloadable!] (restricted)
  4. Johnson, George E & Stafford, Frank P, 1974. "Lifetime Earnings in a Professional Labor Market: Academic Economists," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 549-69, May/June. [Downloadable!] (restricted)
  5. Atack, Jeremy & Bateman, Fred, 1981. "The "Egalitarian Ideal" and the Distribution of Wealth in the Northern Agricultural Community: A Backward Look," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 124-29, February. [Downloadable!] (restricted)
  6. Mirer, Thad W, 1979. "The Wealth-Age Relation among the Aged," American Economic Review, American Economic Association, vol. 69(3), pages 435-43, June. [Downloadable!] (restricted)
  7. Rosen, Sherwin, 1976. "A Theory of Life Earnings," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S45-67, August. [Downloadable!] (restricted)
  8. Shorrocks, A F, 1975. "The Age-Wealth Relationship: A Cross-Section and Cohort Analysis," The Review of Economics and Statistics, MIT Press, vol. 57(2), pages 155-63, May. [Downloadable!] (restricted)
  9. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September. [Downloadable!] (restricted)
  10. Kotlikoff, Laurence J, 1979. "Testing the Theory of Social Security and Life Cycle Accumulation," American Economic Review, American Economic Association, vol. 69(3), pages 396-410, June. [Downloadable!] (restricted)
  11. Hause, John C, 1972. "Earnings Profile: Ability and Schooling," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages S108-S38, Part II, . [Downloadable!] (restricted)
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  1. Marc Robinson, 1983. "Social Security and Physical Capital: An Interpretation of the Evidence, Lessons and Outlook," UCLA Economics Working Papers 307, UCLA Department of Economics. [Downloadable!]
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