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Bequests and Heterogeneity in Retirement Wealth

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  • Mariacristina De Nardi
  • Fang Yang

Abstract

Households hold vastly heterogenous amounts of wealth when they reach retirement, and differences in lifetime earnings explain only part of this variation. This paper studies the role of intergenerational transmission of ability, voluntary bequest motives, and the recipiency of accidental and intended bequests (both in terms of timing and size), in generating wealth dispersion at retirement, in the context of a rich quantitative model. Modeling voluntary bequests, and realistically calibrating them, not only generates more wealth dispersion at retirement and reduces the correlation between retirement wealth and lifetime income, but also generates a skewed bequest distribution that is close to the one in the observed data.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 20058.

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Date of creation: Apr 2014
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Handle: RePEc:nbr:nberwo:20058

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  1. Mariacristina De Nardi & Eric French & John B. Jones, 2010. "Why Do the Elderly Save? The Role of Medical Expenses," Journal of Political Economy, University of Chicago Press, vol. 118(1), pages 39-75, 02.
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  11. Michael Hurd & James P. Smith, 2002. "Expected Bequests and Their Distribution," NBER Working Papers 9142, National Bureau of Economic Research, Inc.
  12. Cagetti, Marco, 2003. "Wealth Accumulation over the Life Cycle and Precautionary Savings," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(3), pages 339-53, July.
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  1. Bequests and Heterogeneity in Retirement Wealth
    by Christian Zimmermann in NEP-DGE blog on 2014-05-23 14:25:07

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