On the Evolution of the US Consumer Wealth Distribution

Thomas Hintermaier and Winfried Koeniger

Review of Economic Dynamics, 2011, vol. 14, issue 2, 317-338

Abstract: We use all available waves of the Survey of Consumer Finances to document the evolution of the wealth distribution in the US since the 1980s. Relying on the shape of this distribution we then estimate a life-cycle incomplete markets model. We find that considering a wide range of net worth percentiles for prime-age consumers between ages 26 and 55 delivers very precise estimates of the structural parameters, impatience and risk aversion. The estimated model captures how average net worth increases with age while the dispersion of net worth falls with age. The model also predicts some of the evolution of the net worth distribution since the 1980s. Feeding the observed higher labor income risk into the model increases precautionary savings while the higher experience premium of labor earnings reduces wealth accumulation. Quantitatively, these two forces imply that the model reproduces the stable average net worth for young consumers since the 1980s and the increasing dispersion of net worth for all prime-age consumers, while the model does not predict the observed increase of average net worth for older consumers between ages 46 and 55. (Copyright: Elsevier)

Keywords: Life cycle; Incomplete markets; Wealth distribution; Simulated method of moments (search for similar items in EconPapers)
JEL-codes: D91 E21 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://dx.doi.org/10.1016/j.red.2010.10.003
Access to full texts is restricted to ScienceDirect subscribers and institutional members. See http://www.sciencedirect.com/ for details.

Related works:
Software Item: Code and data files for "On the Evolution of the US Consumer Wealth Distribution" (2010)
Working Paper: On the Evolution of the US Consumer Wealth Distribution (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:issued:08-75

Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/

DOI: 10.1016/j.red.2010.10.003

Access Statistics for this article

Review of Economic Dynamics is currently edited by Loukas Karabarbounis

More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().