Abstract
A simulation model is developed to account for observed changes in mean household wealth both overall and by age cohort over the 1962–1983 period in the United States. There are three major findings. First, capital gains are the major factor explaining overall wealth changes and account for 77% of the simulated growth in wealth over the entire period. Second, for cohorts under age 40, inheritance and inter vivos transfers dominate observed changes in wealth. Indeed, the oldest age groups appear to have transferred sizable amounts of their wealth to younger generations inter vivos, raising the wealth of these younger groups substantially above what it would be based on saving. Third, while differences in portfolio composition favored the younger cohorts over this period, such differences do not explain a large portion of the great variation in real wealth changes by cohort over the two decade period.
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The authors wish to thank Kevin Camerlo, Maury Gittleman and Kim Hiskey for research and programming assistance.
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Greenwood, D.T., Wolff, E.N. Changes in wealth in the United States, 1962–1983. J Popul Econ 5, 261–288 (1992). https://doi.org/10.1007/BF00163061
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DOI: https://doi.org/10.1007/BF00163061