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Wealth Accumulation by Age Cohort in the U.S., 1962–1992: The Role of Savings, Capital Gains and Intergenerational Transfers

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  • Edward N Wolff

    (Department of Economics, 269 Mercer Street, Room 700, New York University, New York, NY 10003)

Abstract

A simulation model is developed to account for observed changes in mean household wealth both overall and by age cohort over the 1962–92 period in the U.S. There are three major findings. First, capital gains are the major factor explaining overall wealth changes and account for three-fourths of the simulated growth in wealth over the entire period, while savings account for the other quarter. Second, for cohorts under age 50, inter vivos transfers dominate observed changes in wealth. Indeed, the oldest age groups appear to have transferred sizable amounts of their wealth to younger generations inter vivos, raising the wealth of these younger groups substantially above what it would be based on saving alone. Third, over the lifetime, I estimate that savings, inheritance, and inter vivos transfer each contribute about one-third to the lifetime accumulation of wealth. The Geneva Papers on Risk and Insurance (1999) 24, 27–49. doi:10.1111/1468-0440.00003

Suggested Citation

  • Edward N Wolff, 1999. "Wealth Accumulation by Age Cohort in the U.S., 1962–1992: The Role of Savings, Capital Gains and Intergenerational Transfers," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 24(1), pages 27-49, January.
    • Handle: RePEc:pal:gpprii:v:24:y:1999:i:1:p:27-49
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    Cited by:

    1. Kirsanova, Tatiana & Sefton, James, 2007. "A comparison of national saving rates in the UK, US and Italy," European Economic Review, Elsevier, vol. 51(8), pages 1998-2028, November.
    2. Edward N. Wolff, 2017. "Household Wealth Trends in the United States, 1962 to 2016: Has Middle Class Wealth Recovered?," NBER Working Papers 24085, National Bureau of Economic Research, Inc.
    3. Edward N. Wolff, 2018. "The Decline of African-American and Hispanic Wealth since the Great Recession," NBER Working Papers 25198, National Bureau of Economic Research, Inc.
    4. Edward Wolff & Maury Gittleman, 2014. "Inheritances and the distribution of wealth or whatever happened to the great inheritance boom?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 12(4), pages 439-468, December.
    5. Edward N. Wolff, 2016. "Deconstructing Household Wealth Trends in the United States, 1983 - 2013," NBER Working Papers 22704, National Bureau of Economic Research, Inc.
    6. Francisco Azpitarte, 2008. "The Household Wealth Distribution in Spain: The Role of Housing and Financial Wealth," Working Papers 83, ECINEQ, Society for the Study of Economic Inequality.
    7. Miguel Sánchez-Romero & Gemma Abio & Concepció Patxot & Guadalupe Souto, 2018. "Contribution of demography to economic growth," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 9(1), pages 27-64, March.

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