IDEAS home Printed from https://ideas.repec.org/p/tkk/dpaper/dp130.html
   My bibliography  Save this paper

A Cohort-Analysis of Age-Wealth Profile in Finland

Author

Listed:
  • Päivi Kankaanranta

    (University of Turku)

Abstract

In this paper, the relationship between age and household net worth isexamined. The empirical analysis is based on a time-series of four cross-sections of the Finnish household wealth survey. Two different schemesare employed to identify age, cohort and time effects. Time-of-birth isfound to be an important determinant of asset accumulation. Con-trary to the life-cycle model, net worth increases even after retirementage. The cohort effect is found to follow a concave pattern instead ofincreasing monotonously. However, the accumulation behaviour bothover the life-cycle and across cohorts varies considerably by education.

Suggested Citation

  • Päivi Kankaanranta, 2019. "A Cohort-Analysis of Age-Wealth Profile in Finland," Discussion Papers 130, Aboa Centre for Economics.
    • Handle: RePEc:tkk:dpaper:dp130
    as

    Download full text from publisher

    File URL: http://ace-economics.fi/kuvat/dp130.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jesus Fernández-Villaverde & Dirk Krueger, 2007. "Consumption over the Life Cycle: Facts from Consumer Expenditure Survey Data," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 552-565, August.
    2. Kapteyn, Arie & Alessie, Rob & Lusardi, Annamaria, 2005. "Explaining the wealth holdings of different cohorts: Productivity growth and Social Security," European Economic Review, Elsevier, vol. 49(5), pages 1361-1391, July.
    3. Marine Guillerm, 2017. "Pseudo‑panel methods and an example of application to Household Wealth data," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 491-492, pages 109-130.
    4. David J. McKenzie, 2006. "Disentangling Age, Cohort and Time Effects in the Additive Model," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(4), pages 473-495, August.
    5. Angus Deaton & Christina Paxson, 2000. "Growth and Saving Among Individuals and Households," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 212-225, May.
    6. Borsch-Supan, Axel & Reil-Held, Anette & Rodepeter, Ralf & Schnabel, Reinhold & Winter, Joachim, 2001. "The German Savings Puzzle," Research in Economics, Elsevier, vol. 55(1), pages 15-38, March.
    7. Carroll, Christopher D. & Samwick, Andrew A., 1997. "The nature of precautionary wealth," Journal of Monetary Economics, Elsevier, vol. 40(1), pages 41-71, September.
    8. Niimi, Yoko & Horioka, Charles Yuji, 2019. "The wealth decumulation behavior of the retired elderly in Japan: The relative importance of precautionary saving and bequest motives," Journal of the Japanese and International Economies, Elsevier, vol. 51(C), pages 52-63.
    9. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
    10. David A. Wise, 1994. "Studies in the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise94-1, February.
    11. Mariacristina De Nardi & Eric French & John Bailey Jones, 2016. "Savings After Retirement: A Survey," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 177-204, October.
    12. Sam Schulhofer‐Wohl, 2018. "The age‐time‐cohort problem and the identification of structural parameters in life‐cycle models," Quantitative Economics, Econometric Society, vol. 9(2), pages 643-658, July.
    13. Tullio Jappelli, 1999. "The Age‐Wealth Profile And The Life‐Cycle Hypothesis: A Cohort Analysis With A Time Series Of Cross‐Sections Of Italian Households," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(1), pages 57-75, March.
    14. Russell Cooper & Guozhong Zhu, 2016. "Household Finance over the Life-Cycle: What does Education Contribute?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 20, pages 63-89, April.
    15. Jessica A. Wachter & Motohiro Yogo, 2010. "Why Do Household Portfolio Shares Rise in Wealth?," The Review of Financial Studies, Society for Financial Studies, vol. 23(11), pages 3929-3965, November.
    16. G. C. Lim & Q. Zeng, 2016. "Consumption, Income, and Wealth: Evidence from Age, Cohort, and Period Elasticities," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(3), pages 489-508, September.
    17. Pierre-Olivier Gourinchas & Jonathan A. Parker, 2002. "Consumption Over the Life Cycle," Econometrica, Econometric Society, vol. 70(1), pages 47-89, January.
    18. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
    19. Tullio Jappelli & Luigi Pistaferri, 2000. "The dynamics of household wealth accumulation in Italy," Fiscal Studies, Institute for Fiscal Studies, vol. 21(2), pages 269-295, June.
    20. Cagetti, Marco, 2003. "Wealth Accumulation over the Life Cycle and Precautionary Savings," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(3), pages 339-353, July.
    21. Simon C. Parker & Yacine Belghitar & Tim Barmby, 2005. "Wage Uncertainty and the Labour Supply of Self-Employed Workers," Economic Journal, Royal Economic Society, vol. 115(502), pages 190-207, March.
    22. James Poterba & Steven Venti & David Wise, 2011. "The Composition and Drawdown of Wealth in Retirement," Journal of Economic Perspectives, American Economic Association, vol. 25(4), pages 95-118, Fall.
    23. Poterba, James & Venti, Steven & Wise, David A., 2018. "Longitudinal determinants of end-of-life wealth inequality," Journal of Public Economics, Elsevier, vol. 162(C), pages 78-88.
    24. Shorrocks, A F, 1975. "The Age-Wealth Relationship: A Cross-Section and Cohort Analysis," The Review of Economics and Statistics, MIT Press, vol. 57(2), pages 155-163, May.
    25. Carrington, William J & McCue, Kristin & Pierce, Brooks, 1996. "The Role of Employer-Employee Interactions in Labor Market Cycles: Evidence from the Self-Employed," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 571-602, October.
    26. Deaton, Angus, 1992. "Understanding Consumption," OUP Catalogue, Oxford University Press, number 9780198288244.
    27. repec:prs:ecstat:estat_0336-1454_2017_num_491_1_10759 is not listed on IDEAS
    28. Nancy Ammon Jianakoplos & Alexandra Bernasek, 2006. "Financial Risk Taking by Age and Birth Cohort," Southern Economic Journal, John Wiley & Sons, vol. 72(4), pages 981-1001, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Heylen, Freddy & Mareels, Marthe & Van Langenhove, Christophe, 2024. "Long-run perspectives on r-g in OECD countries: An empirical analysis," Journal of International Money and Finance, Elsevier, vol. 145(C).
    2. Mäki-Fränti, Petri, 2022. "The effects of age and cohort on household saving," BoF Economics Review 6/2022, Bank of Finland.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francisco Gomes & Michael Haliassos & Tarun Ramadorai, 2021. "Household Finance," Journal of Economic Literature, American Economic Association, vol. 59(3), pages 919-1000, September.
    2. Tullio Jappelli & Mario Padula & Luigi Pistaferri, 2008. "A Direct Test of The Buffer-Stock Model of Saving," Journal of the European Economic Association, MIT Press, vol. 6(6), pages 1186-1210, December.
    3. Campbell, John Y. & Cocco, Joao F., 2007. "How do house prices affect consumption? Evidence from micro data," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 591-621, April.
    4. HILDEBRAND Vincent, 2001. "Wealth Accumulation of US Households: What do we learn from the SIPP data?," IRISS Working Paper Series 2001-01, IRISS at CEPS/INSTEAD.
    5. Annamaria Lusardi & Pierre-Carl Michaud & Olivia S. Mitchell, 2017. "Optimal Financial Knowledge and Wealth Inequality," Journal of Political Economy, University of Chicago Press, vol. 125(2), pages 431-477.
    6. G. C. Lim & Q. Zeng, 2016. "Consumption, Income, and Wealth: Evidence from Age, Cohort, and Period Elasticities," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(3), pages 489-508, September.
    7. Aleksandra Kolasa, 2017. "Life Cycle Income and Consumption Patterns in Poland," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 9(2), pages 137-172, June.
    8. Lothar Essig, 2005. "Precautionary saving and old-age provisions: Do subjective saving motive measures work?," MEA discussion paper series 05084, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    9. Essig, Lothar, 2005. "Precautionary saving and old-age provisions : do subjective saving motives measures work?," Papers 05-22, Sonderforschungsbreich 504.
    10. Bram De Rock & Bart Capéau, 2015. "The implications of household size and children for life-cycle saving," Working Paper Research 286, National Bank of Belgium.
    11. Groneck, Max & Ludwig, Alexander & Zimper, Alexander, 2016. "A life-cycle model with ambiguous survival beliefs," Journal of Economic Theory, Elsevier, vol. 162(C), pages 137-180.
    12. Hippolyte d’Albis & Ikpidi Badji, 2017. "Intergenerational inequalities in standards of living in France," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 491-492, pages 71-92.
    13. Hochguertel, Stefan & Ohlsson, Henry, 2012. "Who is at the top? Wealth mobility over the life cycle," Working Paper Series, Center for Fiscal Studies 2012:1, Uppsala University, Department of Economics.
    14. Mariacristina De Nardi & Eric French & John Bailey Jones, 2016. "Savings After Retirement: A Survey," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 177-204, October.
    15. Charles Yuji Horioka, 2021. "Is the selfish life-cycle model more applicable in Japan and, if so, why? A literature survey," Review of Economics of the Household, Springer, vol. 19(1), pages 157-187, March.
    16. John K Gibson & Grant M Scobie, 2001. "Household Saving Behaviour in New Zealand: A Cohort Analysis," Treasury Working Paper Series 01/18, New Zealand Treasury.
    17. Andreas Fagereng & Charles Gottlieb & Luigi Guiso, 2017. "Asset Market Participation and Portfolio Choice over the Life-Cycle," Journal of Finance, American Finance Association, vol. 72(2), pages 705-750, April.
    18. Grant M Scobie & John K Gibson, 2003. "Household Saving Behaviour in New Zealand: Why do Cohorts Behave Differently?," Treasury Working Paper Series 03/32, New Zealand Treasury.
    19. David Aristei & Federico Perali & Luca Pieroni, 2008. "Cohort, age and time effects in alcohol consumption by Italian households: a double-hurdle approach," Empirical Economics, Springer, vol. 35(1), pages 29-61, August.
    20. Andersson, Björn, 2001. "Portfolio Allocation over the Life Cycle: Evidence from Swedish Household Data," Working Paper Series 2001:4, Uppsala University, Department of Economics.

    More about this item

    Keywords

    wealth; life-cycle;

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tkk:dpaper:dp130. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Susmita Baulia (email available below). General contact details of provider: https://edirc.repec.org/data/tukkkfi.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.