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Private Wealth Over the Life Cycle: A Meeting Between Microsimulation and Structural Approaches

Author

Listed:
  • Lino Galiana

    (INSEE - Institut national de la statistique et des études économiques (INSEE))

  • Lionel Wilner

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper embeds a structural model of private wealth accumulation over the life cycle within a dynamic microsimulation model designed for long‐run projections of pensions. In such an environment, the optimal savings path results from consumption smoothing and bequests motives, on top of the mortality risk. Preferences are estimated based on a longitudinal wealth survey through a method of simulated moments. Simulations issued from these estimations replicate quite well a private wealth that is more concentrated than labor income. They enable us to compute "augmented" standards of living including capital income, hence to quantify both the countervailing role played by private wealth to earnings dropout after retirement and the impact of the mortality risk in this regard.

Suggested Citation

  • Lino Galiana & Lionel Wilner, 2024. "Private Wealth Over the Life Cycle: A Meeting Between Microsimulation and Structural Approaches," Post-Print hal-04799408, HAL.
    • Handle: RePEc:hal:journl:hal-04799408
    DOI: 10.1111/roiw.12697
    Note: View the original document on HAL open archive server: https://hal.science/hal-04799408v1
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    References listed on IDEAS

    as
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    2. Nicolas Frémeaux & Marion Leturcq, 2019. "Individualisation du patrimoine au sein des couples : quels enjeux pour la fiscalité ?," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 145-175.
    3. Gourieroux, Christian & Monfort, Alain, 1993. "Simulation-based inference : A survey with special reference to panel data models," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 5-33, September.
    4. Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, vol. 58(5), pages 1151-1180, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Microsimulation; Intertemporal Consumer Choice; Life-cycle; Inequality; C63 C88 D15 Microsimulation Intertemporal Consumer Choice Life-cycle Inequality; C63; C88; D15 Microsimulation;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C88 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Other Computer Software
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C88 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Other Computer Software
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving

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