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Private Wealth over the Life-Cycle: A Meeting between Microsimulation and Structural Approaches

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Listed:
  • L. GALIANA

    (Insee)

  • L. WILNER

    (Insee, Crest)

Abstract

This paper embeds a structural model of private wealth accumulation over the life-cycle within a dynamic microsimulation model (Destinie 2) 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

  • L. Galiana & L. Wilner, 2023. "Private Wealth over the Life-Cycle: A Meeting between Microsimulation and Structural Approaches," Documents de Travail de l'Insee - INSEE Working Papers 2023-04, Institut National de la Statistique et des Etudes Economiques.
    • Handle: RePEc:nse:doctra:2023-04
    as

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    File URL: https://www.bnsp.insee.fr/ark:/12148/bc6p07pz2kz/f1.pdf
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    References listed on IDEAS

    as
    1. McFadden, Daniel, 1989. "A Method of Simulated Moments for Estimation of Discrete Response Models without Numerical Integration," Econometrica, Econometric Society, vol. 57(5), pages 995-1026, September.
    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;
    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

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