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Private Pensions, Retirement Wealth and Lifetime Earnings

Author

Listed:
  • Jie Zhou

    (Bank of Canada)

  • James MacGee

    (UWO)

Abstract

This paper investigates the effect of private pensions on the retirement wealth distribution. We incorporate stochastic private pension coverage into a calibrated life-cycle model with stochastic earnings. Private pensions lead to higher net worth inequality at retirement, which is closer to the inequality observed in the PSID than a model without private pensions. However, the offset effect of private pension wealth on net worth is much larger in the model than in the data. We find that taxation and inflation can largely account for the difference.

Suggested Citation

  • Jie Zhou & James MacGee, 2014. "Private Pensions, Retirement Wealth and Lifetime Earnings," 2014 Meeting Papers 181, Society for Economic Dynamics.
    • Handle: RePEc:red:sed014:181
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    References listed on IDEAS

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    Cited by:

    1. Claudio Campanale & Marcello Sartarelli, 2018. "“Life-cycle Wealth Accumulation and Consumption Insurance"," CeRP Working Papers 186, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    2. Claudio Campanale, 2020. "Consumption insurance and education: A puzzle?," Working papers 069, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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