On the evolution of the US consumer wealth distribution

We ask whether a pay-as-you-go financed social security system is welfare improving in an economy with idiosyncratic and aggregate risk. We show that the whole welfare benefit from insurance against both risks is greater than the sum of benefits from insurance against the isolated risks. One reason is the convexity of the welfare gain. The other reason is a direct risk interaction amplifying the utility losses from risk. Our quantitative evaluation shows that introducing a minimum pension leads to sizeable welfare gains, despite substantial crowding out. About 60% of these gains would be missing from summing up the isolated benefits. * Manuscript

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“…(). Their estimates of the Ginis for assets and earnings are very similar to those of Hintermaier and Koeniger ().…”

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confidence: 74%

Idiosyncratic Risk, Aggregate Risk, and the Welfare Effects of Social Security

Harenberg

Ludwig

2018

Int Economic Review

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“…3 We compute pension benefits by computing the average income for the relevant pre-retirement earning years conditional on the last pre-retirement income draw. See Hintermaier and Koeniger (2011) for further details.…”

Section: Calibrationmentioning

confidence: 99%

Differences in Euro-Area Household Finances and their Relevance for Monetary-Policy Transmission

Hintermaier

Koeniger

2019

SSRN Journal

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This paper quantifies the extent of heterogeneity in consumption responses to changes in real interest rates and house prices in the four largest economies in the euro area: France, Germany, Italy, and Spain. We first calibrate a life-cycle incomplete-markets model with a liquid financial asset and illiquid housing to match the large heterogeneity of households asset portfolios, observed in the Household Finance and Consumption Survey (HFCS) for these countries. We then show that the heterogeneity in household finances implies that responses of consumption to changes in the real interest rate and in house prices differ substantially across the analyzed countries, and across age groups within these countries. The different consumption responses quantified in this paper point towards important heterogeneity in monetary-policy transmission within the euro area.

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“…See Table 5. Hintermaier and Koeniger (2011) and the references therein who also find that the real interest rate fell between 1 and 2 percentage points in the period under consideration.…”

mentioning

confidence: 79%

“…It thus seems reasonable to assume that the rise in earnings inequality influenced the behavior of the parents of those households who were surveyed in the NLSY97 almost throughout their entire working life. Hintermaier and Koeniger (2011) 34 The implicit underlying assumption is that efficiency units supplied by high school and college graduates are perfect substitutes in the production process. GMV (2010) allow for imperfect substitutability.…”

Section: Parameters Set Outside Of the Modelmentioning

confidence: 99%

Accounting for the Changing Role of Family Income in Determining College Entry

Winter

2011

SSRN Journal

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In recent decades, the US has experienced a widening of the college enrolment gap between rich and poor families. This is commonly interpreted as evidence for a tightening of borrowing constraints. This paper asks whether this is indeed the case.I present an incomplete-markets overlapping-generations model with college enrolment, in which altruistic parents provide transfers to their children. In the model the rise in earnings inequality observed between 1980 and 2000 acts as the driving force for generating the trends in the data. With the help of counterfactual experiments, I find that fraction of constrained households is much higher (24 instead of 8 percent) than indicated by the narrow enrolment gap in 1980. Contrary to what the development of the enrolment gap in the data suggests, the share of constrained households actually fell (to 18 percent) between 1980 and 2000. I show that altruism is important for explaining these findings.

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On the evolution of the US consumer wealth distribution

Cited by 19 publications

References 20 publications

Idiosyncratic Risk, Aggregate Risk, and the Welfare Effects of Social Security

Idiosyncratic Risk, Aggregate Risk, and the Welfare Effects of Social Security

Differences in Euro-Area Household Finances and their Relevance for Monetary-Policy Transmission

Accounting for the Changing Role of Family Income in Determining College Entry

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