Endogenous Stock Market Participation and Wealth Accumulation: A Life-Cycle Model Perspective

2021 ◽  
Author(s):  
Dongxu Li ◽  
Victor Luo ◽  
Steve Y. Yang
Keyword(s):  
Life Cycle ◽  
Stock Market ◽  
Wealth Accumulation ◽  
Life Cycle Model ◽  
Market Participation ◽  
Cycle Model ◽  
Stock Market Participation

ACCOUNTING FOR LIFE-CYCLE WEALTH ACCUMULATION: THE ROLE OF HOUSING INSTITUTION

2011 ◽  
Vol 16 (4) ◽  
pp. 493-517 ◽  
Author(s):  
Sang-Wook (Stanley) Cho
Keyword(s):  
Life Cycle ◽  
The United States ◽  
Mortgage Market ◽  
Wealth Accumulation ◽  
Labor Income ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Policy Experiments ◽  
Cross Country

This paper constructs a quantitative general equilibrium life-cycle model with uninsurable labor income to account for the differences in wealth accumulation and homeownership between Korea and the United States. The model incorporates different structures in the housing market in the two countries, namely, the mortgage market and the rental arrangements. The results from the calibrated model quantitatively explain some empirical findings in the aggregate and life-cycle profiles of wealth and homeownership. Quantitative policy experiments show that the mortgage market alone can account for more than 40% of the differences in the aggregate homeownership ratios. When coupled with the rental arrangements, both institutions can account for approximately 52% of the differences in the cross-country homeownership ratios.

scholarly journals Intergenerational Transfers and Savings

1988 ◽  
Vol 2 (2) ◽  
pp. 41-58 ◽  
Author(s):  
Laurence J Kotlikoff
Keyword(s):  
Life Cycle ◽  
Dominant Role ◽  
Intergenerational Transfers ◽  
Policy Implications ◽  
Precautionary Savings ◽  
Wealth Accumulation ◽  
Life Cycle Model ◽  
Cycle Model ◽  
Distribution Of Wealth ◽  
Annuity Markets

What is the main explanation for savings? Is it primarily accumulation for retirement as claimed by Albert Ando, Richard Brumberg, and Franco Modigliani in their celebrated Life Cycle Model of Savings? Is it primarily intentional accumulation for intergenerational transfers? Or is it primarily precautionary savings, much of which may be bequeathed because of imperfections in annuity markets? The answer to the savings puzzle has many policy implications and is key to understanding the distribution of wealth. A major piece of the puzzle is the quantitative importance of intergenerational transfers to the accumulation of wealth. As I will argue there is strong evidence that intergenerational transfers play a very important and perhaps dominant role in U.S. wealth accumulation. This does not mean, however, that intentional saving for gifts and bequests is the main motive for savings. Significant intergenerational transfers could also arise in the Life Cycle Model in the absence of well-functioning private annuity markets or close substitutes for such markets. In such a setting, bequests would be involuntary and potentially quite sizeable. Let us first look at the evidence on the importance of intergenerational transfers and then turn to the deeper question of why such transfers arise.

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