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

Listed author(s):
  • Hochguertel, Stefan

    ()

    (Department of Economics, VU University Amsterdam)

  • Ohlsson, Henry

    ()

    (Department of Economics)

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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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
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
Web page: http://www.nek.uu.se/
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  1. 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.
  2. Nancy A. Jianakoplos & Paul L. Menchik, 1997. "Wealth Mobility," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 18-31, February.
  3. 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.
  4. 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.
  5. Tullio Jappelli & Luigi Pistaferri, 2000. "The dynamics of household wealth accumulation in Italy," Fiscal Studies, Institute for Fiscal Studies, vol. 21(2), pages 269-295, June.
  6. Thomas Piketty & Gilles Postel-Vinay & Jean-Laurent Rosenthal, 2006. "Wealth Concentration in a Developing Economy: Paris and France, 1807–1994," American Economic Review, American Economic Association, vol. 96(1), pages 236-256, March.
  7. Karen E. Dynan & Jonathan Skinner & Stephen Zeldes, 2000. "Do the rich save more?," Finance and Economics Discussion Series 2000-52, Board of Governors of the Federal Reserve System (U.S.).
  8. Carroll, Christopher D. & Samwick, Andrew A., 1997. "The nature of precautionary wealth," Journal of Monetary Economics, Elsevier, vol. 40(1), pages 41-71, September.
  9. Selin, Håkan, 2009. "The Rise in Female Employment and the Role of Tax Incentives. An Empirical Analysis of the Swedish Individual Tax Reform of 1971," Working Paper Series 2009:4, Uppsala University, Department of Economics.
  10. 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.
  11. Davies, James B. & Sandstrom, Susanna & Shorrocks, Anthony & Wolff, Edward N., 2008. "The World Distribution of Household Wealth," Working Paper Series DP2008/03, World Institute for Development Economic Research (UNU-WIDER).
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  13. Vincenzo Quadrini, 1997. "Entrepreneurship, saving and social mobility," Discussion Paper / Institute for Empirical Macroeconomics 116, Federal Reserve Bank of Minneapolis.
  14. Stefan Hochguertel & Henry Ohlsson, 2011. "Wealth mobility and dynamics over entire individual working life cycles," BCL working papers 56, Central Bank of Luxembourg.
  15. 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.
  16. Edin, Per-Anders & Fredriksson, Peter, 2000. "LINDA - Longitudinal INdividual DAta for Sweden," Working Paper Series 2000:19, Uppsala University, Department of Economics.
  17. Orazio P. Attanasio & Hilary W. Hoynes, 1995. "Differential Mortality and Wealth Accumulation," NBER Working Papers 5126, National Bureau of Economic Research, Inc.
  18. Jesper Roine & Daniel Waldenström, 2009. "Wealth Concentration over the Path of Development: Sweden, 1873-2006," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(1), pages 151-187, 03.
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  22. 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 155-163, May.
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