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Accounting for the Heterogeneity in Retirement Wealth

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  • Fang (Annie) Yang

Abstract

This paper studies a quantitative dynamic general equilibrium life-cycle model where parents and their children are linked by bequests, both voluntary and accidental, and by the transmission of earnings ability. This model is able to match very well the empirical observation that households with similar lifetime earnings hold very different amounts of wealth at retirement. Earnings heterogeneity and borrowing constraints are essential in generating the variation in wealth at retirement among low lifetime earnings households, while inheritance heterogeneity helps to generate the heterogeneity in wealth at retirement among high lifetime earnings households.

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File URL: http://www.albany.edu/economics/research/workingp/2008/retirementWealth9.pdf
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Bibliographic Info

Paper provided by University at Albany, SUNY, Department of Economics in its series Discussion Papers with number 08-01.

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Date of creation: 2008
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Handle: RePEc:nya:albaec:08-01

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Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.
Phone: (518) 442-4735
Fax: (518) 442-4736

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Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.
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Cited by:
  1. Fang Yang, 2012. "Social Security Reform with Impure Intergenerational Altruism," Discussion Papers 12-01, University at Albany, SUNY, Department of Economics.
  2. Marco Cagetti & Mariacristina De Nardi, 2006. "Wealth Inequality: Data and Models," NBER Working Papers 12550, National Bureau of Economic Research, Inc.
  3. James MacGee & Jie Zhou, 2010. "Private Pensions, Retirement Wealth and Lifetime Earnings," University of Western Ontario, Economic Policy Research Institute Working Papers 20102, University of Western Ontario, Economic Policy Research Institute.

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