The Wealth of Generations

Luis Bauluz and Timothy Meyer ()
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Timothy Meyer: Universität Bonn = University of Bonn

World Inequality Lab Working Papers from HAL

Abstract: This paper uses historical survey microdata to study the life-cycle wealth accumulation across U.S. birth cohorts over the last six decades. We uncover two key new trends: a marked steepening of the life-cycle wealth profile and increased dissaving among older adults. Using a theoretical model and wealth accumulation decompositions, we argue that these new trends were driven by the boom in asset prices since the 1980s: valuation gains led to higher life-cycle wealth and allowed households to increase consumption in retirement. Looking at aggregates, we find that shifts in the life-cycle wealth profile explain a large share of the increase in the aggregate wealth-income ratio. At the same time, the higher consumption by older adults is the most important force behind the decline in the aggregate saving rate since the mid-1980s.

Keywords: Intergenerational inequality; wealth accumulation; lifecycle (search for similar items in EconPapers)
Date: 2024-01
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Working Paper: The Wealth of Generations (2024)
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