EKH Seminar: Luis Bauluz

Seminar titel: The Wealth of Generations

Luis Bauluz from CUNEF Universidad will present a seminar titled:

The Wealth of Generations

Abstract: This paper uses microdata to study the life-cycle wealth accumulation across US birth cohorts over the last six decades. We uncover two key trends: a marked steepening of the lifecycle wealth profile and increased dissaving among older adults. Using wealth accumulation decompositions, we argue that the boom in asset prices since the 1980s is a key driver of the two trends: valuation gains led to higher life-cycle wealth and allowed households to consume in face of these gains in retirement. We then explore the implications for aggregate wealth and saving, comparing the role played by shifts in the life-cycle wealth and saving profiles with the secular increase in income inequality and the aging of the baby boom generation. Income inequality and life-cycle wealth both pushed the ratio of aggregate wealth to GDP to its historical peak. On the other hand, shifts in life-cycle saving and inequality have led to a new divide, with a sharp increase in saving among middle-aged rich individuals mirrored by a decline in saving among older adults. So far, demographic shifts have played a minor role in the evolution of the two trends.