The Wealth of Generations

Luis Bauluz (1, 2) , Timothy Meyer (3)

1 CUNEF Universidad
2 WIL - World Inequality Lab
3 Universität Bonn = University of Bonn

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.

Mots clés: Intergenerational inequality; wealth accumulation; lifecycle

Domaines: Economies et finances

Luis Bauluz, Timothy Meyer. The Wealth of Generations. 2024. ⟨halshs-04424104⟩