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Bequests and Heterogeneity in Retirement Wealth

Listed author(s):
  • Mariacristina De Nardi
  • Fang Yang

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
Publication status: published as De Nardi, Mariacristina & Yang, Fang, 2014. "Bequests and heterogeneity in retirement wealth," European Economic Review, Elsevier, vol. 72(C), pages 182-196.
Handle: RePEc:nbr:nberwo:20058
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