Advanced Search
MyIDEAS: Login to save this paper or follow this series

Explaining the wealth holdings of different cohorts : productivity growth and social security

Contents:

Author Info

  • Kapteyn, Arie

    (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics)

  • Alessie, Rob
  • Lusardi, Annamaria
Registered author(s):

    Abstract

    It is well-known that individuals born in different periods of time (cohorts) exhibit different wealth accumulation paths. While previous studies have used cohort dummies to proxy for this fact, research in this area suffers from a serious identification problem, i.e., how to disentangle age, time, and cohort effects from a simple cross-section or a time series of cross-sections. In this paper we propose to go beyond the simple use of cohort dummies to capture the differences in wealth accumulation across individuals born in different time periods. We introduce two indicators of the economic conditions under which households accumulate wealth. The first one represents productivity differences across cohorts: the aggregate level of GNP per capita when the head of the household entered the labor market. The second measure summarizes the changes in Social Security during the head of household’s working life. The use of these indicators also gets around the identification problem. We estimate the model using panel data from the Netherlands. This is a country whose historical conditions are ideal to study the effects of productivity growth and Social Security. The Netherlands experienced a steady growth after World War II. At the same time, it also built up a very extensive welfare system. Our empirical findings show that productivity growth goes a long way in explaining differences in income across cohorts. Productivity growth and Social Security can explain most, if not all, of the differences in wealth holdings of different cohorts. In comparison with the cohorts that lived without Social Security for a portion of their working life, the cohorts that had Social Security throughout their working life have less than half the accumulation rate of older cohorts.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://degree.ubvu.vu.nl/repec/vua/wpaper/pdf/19990038.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics in its series Serie Research Memoranda with number 0038.

    as in new window
    Length:
    Date of creation: 1999
    Date of revision:
    Handle: RePEc:vua:wpaper:1999-38

    Contact details of provider:
    Email:
    Web page: http://www.feweb.vu.nl
    More information through EDIRC

    Related research

    Keywords: Wealth Accumulation; Productivity Growth; Social Security;

    Find related papers by JEL classification:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:vua:wpaper:1999-38. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (R. Dam).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.