Bequests and heterogeneity in retirement wealth

Mariacristina De Nardi and Fang Yang

European Economic Review, 2014, vol. 72, issue C, 182-196

Abstract: Households hold vastly heterogeneous 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.

Keywords: Wealth inequality; Retirement; Earnings shocks; Bequest; Social Security (search for similar items in EconPapers)
JEL-codes: E21 J14 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (49)

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Working Paper: Bequests and Heterogeneity in Retirement Wealth (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:72:y:2014:i:c:p:182-196

DOI: 10.1016/j.euroecorev.2014.09.004

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