Private Pensions, Retirement Wealth and Lifetime Earnings

James (Jim) MacGee () and Jie Zhou

No 20102, University of Western Ontario, Economic Policy Research Institute Working Papers from University of Western Ontario, Economic Policy Research Institute

Abstract: This paper investigates the effect of private pensions on the retirement wealth distribution. The model incorporates stochastic private pension coverage into a life- cycle model with stochastic earnings. The predictions of the calibrated model are compared to the distribution of retirement net worth and private pension wealth in the PSID. While private pensions lead to higher wealth inequality and reduces the lifetime earnings - retirement wealth correlation, the model still generates too little wealth inequality. However, when we extend the model to include heterogeneous life-cycle earnings profiles and permanent return differences across households, we find that the model largely accounts for the sizeable variation in retirement wealth.

Keywords: private pensions; Wealth inequality; retirement (search for similar items in EconPapers)
JEL-codes: D31 E21 J32 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-age, nep-dge and nep-lab
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Citations: View citations in EconPapers (3)

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Working Paper: Private Pensions, Retirement Wealth and Lifetime Earnings (2014)
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