Wealth Mobility and Dynamics over Entire Individual Working Life Cycles

51 Pages Posted: 6 Mar 2011

See all articles by Stefan Hochguertel

Stefan Hochguertel

VU University Amsterdam; Tinbergen Institute

Henry Ohlsson

Uppsala University - Department of Economics

Date Written: February 14, 2011

Abstract

We study taxable wealth in unique Swedish administrative data, annually following a large sample of households over a period of almost 40 years. The main data limitation is non-observability of wealth for those below the tax exemption level. This implies that much of the focus of the paper is on the rich, since we are confined to those whose wealth becomes taxable over time. We exploit the long panel dimension by estimating dynamic 'fixed effects' models for limited dependent variables that allow for individual heterogeneity in both constants and autoregressive parameters, and control for heterogeneity through observables. We find substantial wealth mobility over the long time spans, partly accounted for by life-cycle behavior, while sufficiently capturing dynamics by an AR(1) process at the individual level.

Keywords: wealth mobility, wealth dynamics, life cycle, heterogeneity, panel data

JEL Classification: C230, D140, D310, D910, H240

Suggested Citation

Hochguertel, Stefan and Ohlsson, Henry, Wealth Mobility and Dynamics over Entire Individual Working Life Cycles (February 14, 2011). ECB Working Paper No. 1301, Available at SSRN: https://ssrn.com/abstract=1761561

Stefan Hochguertel (Contact Author)

VU University Amsterdam ( email )

Dept Econ (FEWEB)
De Boelelaan 1105
1081HV Amsterdam
Netherlands
+31 20 59 86033 (Phone)
+31 20 59 89870 (Fax)

Tinbergen Institute

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

Henry Ohlsson

Uppsala University - Department of Economics ( email )

Box 513
Uppsala, SE-75120
Sweden
+46 18 471 51 04 (Phone)

HOME PAGE: http://www.uueconomics.se/henryo/

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