Bequests and Heterogeneity in Retirement Wealth

32 Pages Posted: 21 Apr 2014

See all articles by Mariacristina De Nardi

Mariacristina De Nardi

University College London, Economics Dpt.; Federal Reserve Bank of Chicago; National Bureau of Economic Research (NBER) - Public Economics

Fang Yang

Louisiana State University, Baton Rouge

Date Written: April 2014

Abstract

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.

Suggested Citation

De Nardi, Mariacristina and Yang, Fang, Bequests and Heterogeneity in Retirement Wealth (April 2014). NBER Working Paper No. w20058. Available at SSRN: https://ssrn.com/abstract=2427161

Mariacristina De Nardi (Contact Author)

University College London, Economics Dpt. ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom

Federal Reserve Bank of Chicago ( email )

Research Department
230 South LaSalle Street
Chicago, IL 60604
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312 322 5769 (Phone)
312 322 2357 (Fax)

HOME PAGE: http://www.nber.org/~denardim

National Bureau of Economic Research (NBER) - Public Economics ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/~denardim

Fang Yang

Louisiana State University, Baton Rouge ( email )

Baton Rouge, LA 70803
United States

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

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