Who is at the Top? Wealth Mobility Over the Life Cycle

Tinbergen Institute Discussion Paper No. 12-004/3

54 Pages Posted: 16 Jan 2012

See all articles by Stefan Hochguertel

Stefan Hochguertel

VU University Amsterdam; Tinbergen Institute

Henry Ohlsson

Uppsala University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: January 16, 2012

Abstract

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.

Suggested Citation

Hochguertel, Stefan and Ohlsson, Henry, Who is at the Top? Wealth Mobility Over the Life Cycle (January 16, 2012). Tinbergen Institute Discussion Paper No. 12-004/3, Available at SSRN: https://ssrn.com/abstract=1986020 or http://dx.doi.org/10.2139/ssrn.1986020

Stefan Hochguertel (Contact Author)

VU University Amsterdam ( email )

Dept Econ (FEWEB)
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Tinbergen Institute

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Henry Ohlsson

Uppsala University - Department of Economics ( email )

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Uppsala, SE-75120
Sweden
+46 18 471 51 04 (Phone)

HOME PAGE: http://www.uueconomics.se/henryo/

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