Working Paper Series, Department of Economics, Uppsala University
No 2012:1:
Who is at the top? Wealth mobility over the life cycle
Stefan Hochguertel ()
and Henry Ohlsson ()
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 accumulation.
There are also limited precautionary motives for wealth accumulation when
households experience income uncertainty.
Keywords: intragenerational wealth mobility; wealth durations; life-cycle motives; precautionary motives; panel data; (follow links to similar papers)
JEL-Codes: D14; D31; D91; H24; (follow links to similar papers)
52 pages, January 16, 2012
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