January 24, 2024
Written by WID.world

The wealth of generations

Since the 1980s, rich countries have witnessed an increase in wealth-to-income ratios, wealth inequality, and a boom in asset prices. Yet, little is known about the long-run behavior of these trends in connection to the life-cycle of consecutive generations.

In this paper, Luis Bauluz and Timothy Meyer use historical survey microdata to study, for the first time, the life-cycle wealth accumulation across US birth cohorts over the last six decades, as well as a micro view on the evolution of aggregate wealth and saving.

Key findings:

  • They undercover two key new trends: a marked steepening of the life-cycle wealth profile and increased dissaving among older adults.
  • Using a theoretical model and wealth accumulation decompositions, they argue that these new trends were driven by the boom in asset prices since the 1980s: valuation gains led to higher life-cycle wealth and allowed households to increase consumption in retirement.
  • Looking at aggregates, they find that shifts in the life-cycle wealth profile explain a large share of the increase in the aggregate wealth-income ratio. At the same time, the higher consumption by older adults is the most important force behind the decline in the aggregate saving rate since the mid-1980s.


  • Luis Bauluz, CUNEF Universidad, World Inequality Lab
  • Timothy Meyer, University of Bonn



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