Bequests and heterogeneity in retirement wealth

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Households hold vastly heterogeneous amounts of wealth when they reach retirement, and differences in lifetime earnings explain only part of this variation. This paper studies the role of intergenerational transmission of ability, voluntary bequest motives, and the recipiency of accidental and intended bequests (both in terms of timing and size) in generating wealth dispersion at retirement, in the context of a rich quantitative model. Modeling voluntary bequests, and realistically calibrating them, not only generates more wealth dispersion at retirement and reduces the correlation between retirement wealth and lifetime income, but also generates a skewed bequest distribution that is close to the one in the observed data.

Original languageEnglish (US)
Pages (from-to)182-196
Number of pages15
JournalEuropean Economic Review
StatePublished - Nov 1 2014
Externally publishedYes

Bibliographical note

Funding Information:
We thank Michele Boldrin, John Boyd, V. V. Chari, Betty Daniel, Zvi Eckstein, Ayse Imrohoroglu, Helen Koshy, John B. Jones, Larry Jones, Eric M. Leeper, an associate editor, two referees, and participants at various seminars and conferences for helpful comments and suggestions. This material is based upon work supported by HPC@LSU computing resources. The research leading to these results has also received funding from the European Research Council under the European Union's Seventh Framework Programme (FP/2007-2013)/ ERC Grant Agreement n. 614328. Yang acknowledges support by the Center for Retirement Research at Boston College pursuant to grants from the U.S. Social Security Administration (SSA) 10-P-98361-1-04 , funded as part of the Retirement Research Consortium (RRC). Mariacristina De Nardi acknowledges financial support from the ESRC, through the Centre for Macroeconomics. The findings and conclusions expressed are solely those of the authors and do not represent the views of SSA, any agency of the Federal Government, the Federal Reserve Bank of Chicago, the RRC, or Boston College.

Publisher Copyright:
© 2014 The Authors.


  • Bequest
  • Earnings shocks
  • Retirement
  • Social Security
  • Wealth inequality


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