DP7850 On the Evolution of the US Consumer Wealth Distribution

Author(s): Thomas Hintermaier, Winfried Koeniger
Publication Date: June 2010
Keyword(s): incomplete markets, life cycle, simulated method of moments, wealth distribution
JEL(s): D91, E21
Programme Areas: International Macroeconomics, Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=7850

We use all available waves of the Survey of Consumer Finances to document the evolution of the wealth distribution in the US since the 1980s. We then rely on the shape of this distribution to estimate a life-cycle incomplete markets model. We find that considering a wide range of net-worth percentiles delivers very precise estimates of the structural parameters, impatience and risk aversion. The estimated model predicts some of the observed changes of the net-worth distribution, in particular for young consumers between ages 26 and 35.