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The Wealth of Generations

Author

Listed:
  • Luis Bauluz

    (CUNEF Universidad, WIL - World Inequality Lab)

  • Timothy Meyer

    (Universität Bonn = University of Bonn)

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.

Suggested Citation

  • Luis Bauluz & Timothy Meyer, 2024. "The Wealth of Generations," Working Papers halshs-04424104, HAL.
    • Handle: RePEc:hal:wpaper:halshs-04424104
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04424104
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