Premium
THE AGE‐WEALTH PROFILE AND THE LIFE‐CYCLE HYPOTHESIS: A COHORT ANALYSIS WITH A TIME SERIES OF CROSS‐SECTIONS OF ITALIAN HOUSEHOLDS
Author(s) -
Jappelli Tullio
Publication year - 1999
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.1999.tb00312.x
Subject(s) - cohort , economics , life cycle hypothesis , cohort effect , wealth distribution , population , population ageing , yield (engineering) , demographic economics , econometrics , demography , statistics , macroeconomics , mathematics , inequality , mathematical analysis , materials science , sociology , metallurgy
In this paper I estimate the age‐wealth profile under two different identification assumptions about age, cohort and time effects. According to the life‐cycle model, the two sets of assumptions should yield similar age‐wealth profiles. Using the 1984–93 Italian Survey of Household Income and Wealth, the estimated average annual rate of wealth decumulation in old age is found to be between 3 and 6 percent. As in the life‐cycle model, the cohort effect increases with year of birth. However, the results also uncover considerable population heterogeneity: the rates of wealth decumulation are much lower for rich households and households headed by individuals with higher education.