U.S. Pensions in the 2000s: The Lost Decade?

The last three decades saw a sharp decline in traditional defined benefit (DB) pensions and a corresponding rise in defined contribution (DC) plans. Using the Survey of Consumer Finances from 1983 to 2010, I find that after robust gains in the 1980s and 1990s, pension wealth experienced a marked slowdown in growth from 2001 to 2007 and then fell in absolute terms from 2007 to 2010. Median augmented wealth (the sum of net worth, pensions, and Social Security wealth) advanced slower than median net worth from 1983 to 2007 and its inequality rose more, as DB wealth fell off. However, from 2007 to 2010, the opposite occurred. While median wealth plummeted by 41 percent and inequality spiked by 0.032 Gini points, median augmented wealth fell by only 21 percent and its Gini coefficient rose by only 0.009 points. The differences are due to the moderating influence of Social Security wealth.     

The Joint Distribution of Net Worth and Pension Wealth in Germany

The research on wealth inequality has generally focused on real and financial assets, while giving little attention to pension wealth: the present value of future pension entitlements from public and company pension schemes. This is surprising given the important role pension plans play in guaranteeing material security and well‐being for a majority of the population, and suggests that they should be accounted for in peoples’ wealth portfolios. Using novel data from the Socio‐Economic Panel (SOEP), we study the incidence, relevance, and distribution of individual pension wealth, net worth, and augmented wealth (the sum of the two) in Germany. Further, we investigate age‐wealth profiles and differences between East and West Germany.     

INTERNATIONAL COMPARISONS OF WEALTH INEQUALITY

This study presents reasonably comparable estimates of the size distribution of household or personal wealth for eight OECD countries—Australia, Canada, France, Germany, Japan, Sweden, the United Kingdom, and the United States. In the mid-1980s, the U.S. ranked as the most unequal and Japan the least, while the other six countries had roughly comparable levels of wealth inequality. Moreover, while wealth inequality rose sharply in the U.S. during the 1980s, it increased modestly in Sweden and showed little change or a slight decline in Canada, France, and the U.K. A comparison of time trends for the U.K. and the U.S. suggests that the relatively high wealth inequality in the U.S. in the 1980s represents a marked turnaround from the 1950s, when the U.S. was considerably more equal in terms of wealth ownership than the U.K. Comparative results for the two countries hold for both conventional (marketable) wealth and for augmented wealth, which includes a valuation of public and private pension wealth.     

THE SIZE DISTRIBUTION OF HOUSEHOLD DISPOSABLE WEALTH IN THE UNITED STATES

In this study, new estimates are presented of the size distribution of household wealth in the U.S. in 1969. Compared to previous studies, its major advance is the inclusion of all marketable or discretionary household assets and liabilities and their alignment with national balance sheet totals. Household disposable wealth (HDW) is defined as the sum of all marketable or fungible assets held by households less liabilities. The Gini coefficient for HDW is 0.72, the share held by the richest one percent of households is 31 percent, and the share held by the top five percent is 49 percent. There is, however, a large variation in the concentration of different household assets. The Gini coefficient is 0.30 for household durables and inventories, 0.69 for equity in owner-occupied housing, 0.94 for bonds and securities, and 0.98 for corporate stock. HDW is then divided into two mutually exclusive components. The first, called "life-cycle wealth," is defined as the sum of equity in owner-occupied housing, durables, household inventory, demand deposits and currency, and the cash value of life insurance and pensions less consumer debt. This form of wealth tends to be accumulated over the life-cycle for either consumption, liquidity, or retirement purposes. The second, called "capital wealth," is the sum of time and savings deposits, bonds and securities, corporate stock, business and investment real estate equity, and trust fund equity. Life-cycle wealth is substantially less concentrated than capital wealth. The Gini coefficient for it is 0.59, while that for capital wealth is 0.88. Moreover, among the lower wealth groups, over 80 percent of household wealth takes the form of life-cycle wealth, whereas among the top wealth groups the proportion is under 20 percent. The results suggest substantially different savings motivations between the two groups.     

THE PRESIDENT'S COMMISSION ON PENSION POLICY HOUSEHOLD SURVEY 1979: NET WEALTH DISTRIBUTIONS BY TYPE AND AGE FOR THE UNITED STATES

A household survey was done for the U.S. President's Commission on Pension Policy (1979-81). This paper reports on the net wealth of families in the United States for the year 1979, the first wave of the survey. The survey was begun in September 1979 and was a two-wave, nationwide random sample of households in the United States. The survey instrument gathered information on income, wealth, labor supply, participation in pension plans, vesting status, entitlement to various benefits, attitudinal views on retirement, social security wealth, and individual demographic characteristics. Details of the survey methodology are reported. A response rate of sixty-two percent was achieved among the 6,384 dwelling units in the first wave. Imputations are made to calculate the wealth embodied in private and public employee-based pensions. Included in this valuation is an adjustment for expected vesting status in the pension plan. Net wealth is examined by type and age of the head of household. The average net wealth of the family is $53,956, and the average value of retirement wealth is $3,281 which comprises about 5 to 6 percent of net wealth. The striking changes in the portfolio of net wealth are depicted over the cross-section of age cohorts. The oldest age cohort, 65 and over, is found to have for retirement wealth the lowest frequency of ownership, the lowest proportion of their portfolio in this form of wealth, and the second to lowest average value.     

通货膨胀冲击的财产再分配效应——基于中美两国的比较研究

本文利用微观调查数据研究了中美两国通胀冲击的财产再分配效应。本文的定量研究结果表明,通胀冲击将侵蚀中国家庭部门的财产,并进一步恶化家庭间的财产分布;而美国的情况却截然相反。从通胀再分配效应的视角出发,本文建议我国在制定货币政策时应当更加重视民生目标,逐步建立起多种形式的通胀补贴制度,以增强社会底层的通胀承受能力。     

贫富差距、供求弹性与房价*

近些年，中国的贫富差距和房价居高不下，但现有文献忽视供求弹性与贫富差距交互作用对房价的影响。据此，本文构建结合贫富差距和供求弹性的住房存量调整模型，使用中国2002—2012年7省份33个城市的UHS数据发现，收入和财富的基尼系数对房价有正影响；供求弹性对房价分别有负影响和正影响；收入和财富基尼系数与供求弹性交互项对房价分别有正影响和负影响。据此，为防止房价泡沫，各级政府一方面应缩小贫富差距，另一方面应增加土地和住房供给。     

Evolutionary Economics,Rational Expectations,and Monetary Policy

Wealth disparity is a critical factor in the perpetuation of blackwhite disparity in the United States. Intergenerational wealth transfers are the major determinant of household wealth formation. A program of reparations would acknowledge past and continued injustice, redress such injustices, and provide closure. Radical institutional analysis benefits this policy discussion in at least three areas: explaining the re-creation of discrimination; indicating the role of wealth disparity; and identifying the funding source for reparations. For centuries the economic surplus has enhanced white wealth relative to black wealth. A program of reparations suggests directing the surplus toward funding black-white equality.     

Public Pensions: To What Extent Do They Account for Swedish Wealth Inequality?

Sweden's distribution of disposable income is very even, with a Gini coefficient of just 0.31. Yet its wealth distribution is extremely unequal, with a Gini coefficient of 0.79. Moreover, Swedish wealth inequality is, to a large extent, driven by the large fraction of households with zero or negative wealth. In this paper, we investigate to what extent the redistributive public pension scheme is responsible for these features of the data. To address this problem, we study the properties of two overlapping generations economies with uninsurable idiosyncratic risk. The first has a pension system modeled on the actual system; the second has no public pension scheme at all. Our findings support the view that the public pension scheme is, to a large extent, responsible for the features of the data that we focus on. Journal of Economic Literature Classification Numbers: E13, D31, H55.     

How Fat is the Top Tail of the Wealth Distribution?

Differential unit non‐response in household wealth surveys biases estimates of top tail wealth shares downward. Using Monte Carlo evidence, I show that adding only a few extreme observations to wealth surveys is sufficient to remove the downward bias. Combining extreme wealth observations from Forbes World's billionaires with the Survey of Consumer Finances, the Wealth and Assets Survey, and the Household Finance and Consumption Survey, I provide new improved estimates of top tail wealth in the United States, the United Kingdom, and nine euro area countries. These new estimates indicate significantly higher top wealth shares than those calculated from the wealth surveys alone.     

Evolution of wealth inequality in China

Household wealth is a key indicator that reflects national economic competiveness and individual income levels. The distribution of wealth is central for evaluating social justice in a country. This article uses a data set composed of the 2002 China Household Income Project and the 2010 Chinese Family Panel Survey to analyze the level of wealth and wealth inequality in China during 2002 and 2010. The analysis decomposes the evolution of wealth inequality during that period in terms of the structure and composition of wealth. The findings show that there was a large increase in the quantity of wealth and wealth inequality between 2002 and 2010. The level of wealth in 2010 was four times that of 2002, and housing assets were the greatest component of overall wealth in 2010. Wealth inequality also rose dramatically after 2002, with the Gini coefficient of the distribution of wealth increasing from 0.538 in 2002 to 0.739 in 2010. The rapidly escalating price of housing has been the main contributor to increasing wealth inequality in recent years.     

DISTRIBUTION OF WEALTH IN THE UNITED KINGDOM: EFFECT OF INCLUDING PENSION RIGHTS,AND ANALYSIS BY AGE-GROUP*

This article on the distribution of wealth among individuals in the United Kingdom presents recent work on the effects of including pension rights and the significance of sex, age and marital status. It describes the rationale for including the accrued rights in occupational and State pension schemes (funded or unfunded) and the methods of estimation used. For funded schemes the rights are valued as the accrued liability of the schemes to their members, and for unfunded schemes similar liabilities are hypothecated; these estimates of the value of accrued pension rights involve assumptions about future earnings and interest rates. The trend in average marketable wealth with age is upwards until advanced years when it slows down or slightly reverses. Adding occupational pension rights only slightly raises the trend for females but has a bigger effect for males. Adding State pension rights raises these upward trends until the age of 60 after which there is a decline. For marketable wealth on the average males are wealthier than females but less wealthy if single, divorced or widowed. Adding occupational pension rights improves the relative position of males; adding State pension rights cancels this out. The effect of marital status rises with both age and sex and therefore a detailed three-way analysis is made. For females widows are on average the wealthiest; for young males the married; for older males the single. Using Theil's coefficient of entropy for comparing the inequality of wealth, the addition of pension rights reduces inequality by two-thirds. Age accounts for only 6 percent of inequality for marketable wealth but for 31 percent if pension rights are included.     

A COMPARATIVE ANALYSIS OF HOUSEHOLD WEALTH PATTERNS IN FRANCE AND THE UNITED STATES

We find that household wealth is distributed more unequally in the U.S. in 1983 than France in 1986. The Gini coefficient is 0.77 for the U.S. and 0.71 for France. There are also significant differences in the composition of wealth. Owner-occupied housing accounted for half of total assets in France, and only 30 percent in the U.S., while corporate stock and financial securities amounted to 19 percent in the U.S. and 8 percent in France. The debt-equity ratio was 0.13 in France and 0.20 in the U.S. The age-wealth profile in the two countries had the characteristic hump-shape predicted by the life-cycle model, but the profile was much flatter in France and peaked for families aged 50–59 in France, compared to 60–69 in the US.     

Public pension and household saving: Evidence from urban China

We relate household savings to pension reform, to explain the high household savings rates in urban China from a new perspective. We use the exogenous – policy-induced – variation in pension wealth to estimate explicitly the impact of pension wealth on household savings, and obtain evidence of a significant offset effect of pension wealth on household savings. Although the size of the effect depends on the parameter values assumed, the finding that household savings are affected by pension reform is robust. Our estimates show that, under plausible scenarios, pension reform boosted household savings rates in 1999 by about 6–9 percentage points for cohorts aged 25–29 and by about 2–3 percentage points for cohorts aged 50–59. Our results also indicate that declining pension wealth reduces expenditure on education and health more than on other consumption items.     

The Impact of Inheritance on the Distribution of Wealth: Evidence from Great Britain

Using the British Household Panel Survey, we investigate the role of inheritance in shaping the distribution of household wealth in Great Britain during 1995–2005a period characterized by a substantial increase in wealth and an equally important decrease in wealth inequality. Abstracting from behavioral effects, we find that inheritances received during this period accounted for 30 percent of the increase in wealth of inheritors. Regression estimates of the effect of inheritance on wealth accumulation suggest that households spend 30 percent of their inheritances on average, and that there is substantial heterogeneity in household responses. Households that accumulated more wealth saved a larger share of their inheritances, as did middle aged households and those with lower initial wealth. Although inheritances are highly unequal they had a small impact on overall wealth inequality. This mainly reflected the fact that their size relative to other sources of wealth was very small.     

养老保险改革对家庭储蓄率的影响:中国的经验证据

本文利用1995年和1999年城镇住户调查数据(CHIPS)分析中国养老保险制度改革对家庭储蓄率的影响,从一个新的角度解释20世纪90年代中后期中国家庭储蓄率上升的原因。1995—1997年间中国对城镇企业职工进行的养老保险制度改革使得企业职工养老金财富发生变化,这种养老金财富的变化具有外生性,因而这项改革可以作为一项政策实验用来识别养老金财富对家庭储蓄率的影响。研究结果表明:中国的储蓄行为可以由生命周期模型解释;养老金财富对于家庭储蓄存在显著的替代效应,这一效应平均为-0.4—-0.3左右;但不同家庭这种替代效应有明显差异,户主年龄在35—49岁的家庭,储蓄率会显著受到养老金财富的影响,其他家庭这一影响并不显著。     

不同养老保障机制与家庭储蓄率——基于世代交叠模型的实证研究

目前,我国的养老保障机制采用以社会养老保险为基础的多渠道养老保险机制,家庭成员赡养、个人金融投资和养老保险就成为了三种主要方式。这一结论已经得到了学术界的广泛认可,然而我国不同养老渠道之间的比例和关系尚缺乏实证研究。家庭自主的金融资产投资、家庭成员之间的赡养效果还没有得到充分的检验。文章基于2008年和2009年的中国家庭追踪调查(CFPS)数据,首次运用2005年政策调整后的数据进行实证研究,对我国养老金财富、个人金融投资以及家庭成员赡养率之间的关系进行了分析研究。文章根据传统的世代交叠模型,针对现有数据,建立了一个三期世代交叠模型,然后分析了不同渠道养老保险收入对家庭储蓄率的影响。研究结果表明,基本养老金财富与个人金融投资对非退休人群的储蓄有显著的负向影响,退休者的储蓄率主要受家庭成员赡养影响,并且呈负相关的关系。     

The Gender Wealth Gap Across European Countries

This paper studies the gap in wealth between male and female single households using 2010 Household Finance and Consumption Survey data for eight European countries. In the raw data, a large gap emerges at the upper end of the unconditional distribution. While OLS estimates show no difference in average net wealth levels, quantile regressions at the 95th percentile yield mixed evidence for the gender wealth gap in different specifications. Labour market characteristics and participation in asset and debt categories largely explain the differences between male and female single households. The gender gap in net wealth is driven by gaps in gross wealth and its components, but is attenuated in four countries by gender gaps in (collateralized) debt. In the full specification, the unexplained gap in gross wealth amounts to 27 percent in Slovakia, 33 percent in France, 44 percent in Austria, 45 percent in Germany, and 48 percent in Greece.     

TRENDS IN AGGREGATE HOUSEHOLD WEALTH IN THE US., 1900–83

New estimates of aggregate household wealth for the U S. covering selected years in the period from 1900 to 1983 are presented. I find that marketable wealth per capita grew at 1.46 percent per year in real terms over the 1900–83 period, while real wealth per household grew at 0.81 percent per year. However, the growth rate was not uniform over the period, with the rates high during the 1900–29 and the 1949–69 periods, and slow during the other years. Moreover, real per capita wealth actually increased more slowly than real per capita disposable income and real per capita GNP over the century. I also find dramatic changes in the composition of household wealth over the century. In particular, both tangibles and fixed claim assets increased relative to total assets over the period from 1900 to 1983, while equities fell from about half to a quarter. Owner-occupied housing increased only moderately as a proportion of assets, from 17 percent in 1900 to 20 percent in 1983. Unincorporated business equity fell from over a third of total assets to 12 percent. Among financial assets, the biggest relative growth occurred in deposits in financial institutions, which grew from 8 percent in 1900 to 22 percent in 1983. Corporate stock had the most volatile behavior in the household portfolio, growing from 13 percent of total assets in 1900 to 27 percent in 1929, falling to 10 percent in 1949, rising to 22 percent in 1965, and then falling to 11 percent by 1983. Debt as a proportion of total assets rose from 5 percent in 1900 to 16 percent in 1983. Finally, both pension reserves and social security wealth increased relative to marketable assets from virtually zero in 1900 to 12 and 48 percent, respectively.     

WEALTH HOLDINGS AND POVERTY STATUS IN THE U.S.

Families below the poverty line are better off in terms of wealth than income. In 1962, the ratio of mean income between families below and above the poverty line is 0.19 and the ratio of mean wealth is 0.29. The corresponding ratios for 1983 are 0.16 and 0.19. On average, the elderly poor are better off in terms of wealth than the younger poor, particularly relative to their own income. However, the poor have become worse off in terms of wealth between 1962 and 1983, when their real income grew by 6 percent and their real wealth declined by 11 percent. The inclusion of pension and social security wealth in the household portfolio narrows the wealth gap between the poor and non-poor, particularly for families under 65 years of age. Alternative poverty rates are also calculated based on the inclusion of annuity flows from wealth in household income. The reduction in the poverty rate between 1962 and 1983, from 21 to 15 percent on the basis of the official rate, is considerably lower with these alternative definitions.