Accounting for the Heterogeneity in Retirement Wealth

Posted: 5 Mar 2010

See all articles by Fang Yang

Fang Yang

Louisiana State University, Baton Rouge

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Date Written: February 15, 2010

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.

Suggested Citation

Yang, Fang, Accounting for the Heterogeneity in Retirement Wealth (February 15, 2010). Available at SSRN: https://ssrn.com/abstract=1553168

Fang Yang (Contact Author)

Louisiana State University, Baton Rouge ( email )

Baton Rouge, LA 70803
United States

HOME PAGE: http://faculty.bus.lsu.edu/fyang/

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