We thank colleagues at the University of Michigan for developing the Health and Retirement Survey. We also are grateful to the National Institute of Aging, the Center for the Demography of Health and Aging at UW-Madison, and the Russell Sage Foundation for financial support, Sheng-Kai Chang for sharing code that assisted in the earnings estimation, and to numerous colleagues at Wisconsin and elsewhere and to seminar participants for helpful comments. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.

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This paper examines how personal bankruptcy and bankruptcy exemptions affect the supply and demand for credit. While generous state-level bankruptcy exemptions are probably viewed by most policymakers as benefiting less-well-off borrowers, our results using data from the 1983 Survey of Consumer Finances suggest they increase the amount of credit held by high-asset households and reduce the availability and amount of credit to low-asset households, conditioning on observable characteristics. We also find evidence that interest rates on automobile loans for lowasset households are higher in high exemption states. Thus, bankruptcy exemptions redistribute credit toward borrowers with high assets.

This paper uses household data to provide direct estimates of intergenerational transfers as a source of wealth. The authors distinguish between intended transfers (for example, gifts to other households) and possibly unintended transfers (bequests) and estimate that intended transfers account for at least 20 percent of net worth. Thus, a significant portion of the U.S. wealth cannot be explained by the life-cycle model, even when the model is augmented to allow for bequests. Estimated bequests can account for an additional 31 percent of net worth. The authors also show that transfers among living people are about half as large as bequests.