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Bequests and heterogeneity in retirement wealth

De Nardi, M; Yang, F; (2014) Bequests and heterogeneity in retirement wealth. EUROPEAN ECONOMIC REVIEW , 72 182 - 196. 10.1016/j.euroecorev.2014.09.004. Green open access

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Abstract

Households hold vastly heterogeneous amounts of wealth when they reach retirement, and differences in lifetime earnings explain only part of this variation. This paper studies the role of intergenerational transmission of ability, voluntary bequest motives, and the recipiency of accidental and intended bequests (both in terms of timing and size) in generating wealth dispersion at retirement, in the context of a rich quantitative model. Modeling voluntary bequests, and realistically calibrating them, not only generates more wealth dispersion at retirement and reduces the correlation between retirement wealth and lifetime income, but also generates a skewed bequest distribution that is close to the one in the observed data.

Type: Article
Title: Bequests and heterogeneity in retirement wealth
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.euroecorev.2014.09.004
Publisher version: http://dx.doi.org/10.1016/j.euroecorev.2014.09.004
Additional information: Copyright © 2014 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license
Keywords: Wealth inequality, Retirement, Earnings shocks, Bequest, Social Security
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/1465088
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