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Who is at the Top? Wealth Mobility over the Life Cycle

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  • Stefan Hochguertel

    (VU University Amsterdam)

  • Henry Ohlsson

    (Uppsala University)

Abstract

Who is wealthy? This paper presents empirical estimates of household movements into and out of the top percents of the wealth distribution over individual life cycles. There are life-cycle motives and precautionary motives for wealth accumulation. The opportunities to accumulate wealth create incentives for education, work effort, and entrepreneurship. We would expect considerable wealth mobility over the life cycle if the life-cycle motives and incentives to accumulate are strong and affect behavior. The data are from an administrative Swedish source that retains wealth information from tax registers. The data are unique, they follow a large sample of households over almost 40 years. There is substantial mobility when we follow individual households over long enough time spans. We find that wealth mobility increased until the end of the 1980s and then started to decrease. Age-wealth probability profiles are consistent with life-cycle motives for wealth ac cumulation. There are also limited precautionary motives for wealth accumulation when households experience income uncertainty.

Suggested Citation

  • Stefan Hochguertel & Henry Ohlsson, 2012. "Who is at the Top? Wealth Mobility over the Life Cycle," Tinbergen Institute Discussion Papers 12-004/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20120004
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    Cited by:

    1. Gunnar Rietz & Magnus Henrekson & Daniel Waldenström, 2015. "Swedish Inheritance and Gift Taxation (1885–2004)," Palgrave Macmillan Books, in: Magnus Henrekson & Mikael Stenkula (ed.), Swedish Taxation, chapter 0, pages 223-265, Palgrave Macmillan.
    2. Ohlsson, Henry & Roine, Jesper & Waldenström, Daniel, 2014. "Inherited wealth over the path of development: Sweden, 1810–2010," Working Paper Series, Center for Fiscal Studies 2014:7, Uppsala University, Department of Economics.
    3. Henrekson Magnus & Rietz Gunnar Du, 2014. "The Rise and Fall of Swedish Wealth Taxation," Nordic Tax Journal, Sciendo, vol. 2014(1), pages 9-35, May.
    4. Jean-Brieux Delbos, 2016. "Once in the Elite, Always in the Elite? Changing Wealth in a Changing City (Paris, France, 1845-1859)," Revue d'économie politique, Dalloz, vol. 126(5), pages 683-719.

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    More about this item

    Keywords

    intragenerational wealth mobility; wealth durations; life-cycle motives; precautionary motives; panel data;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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