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dc.contributor.authorLaitner, John P.
dc.date.accessioned2007-04-25T14:03:32Z
dc.date.available2007-04-25T14:03:32Z
dc.date.issued2004-03
dc.identifier.urihttps://hdl.handle.net/2027.42/50536
dc.description.abstractThis paper studies the quantitative importance of precautionary wealth accumulation relative to life-cycle saving for retirement. Section 1 examines panel data on earnings from the PSID. Using a bivariate normal model of random effects, we find that second- period-of-life earnings are strongly positively correlated with initial earnings but have a higher variance. Section 2 studies the consequences for life-cycle saving. Households know their youthful earning power as they enter the labor market, but only in midlife do they learn their actual second-period earning ability. For plausible calibrations, precautionary saving only adds 5-6% to aggregative life-cycle wealth accumulation. Nevertheless, we find that, given borrowing constraints on households’ behavior, the variety of earning profiles that our bivariate normal model generates itself stimulates more than twice as much extra wealth accumulation as precautionary saving.en
dc.description.sponsorshipSocial Security Administrationen
dc.format.extent457836 bytes
dc.format.mimetypeapplication/pdf
dc.language.isoen_USen
dc.publisherMichigan Retirement Research Center, University of Michigan, P.O. Box 1248, Ann Arbor, MI 48104en
dc.relation.ispartofseriesWP 2004-083en
dc.titlePrecautionary Saving Over the Lifecycleen
dc.typeWorking Paperen
dc.subject.hlbsecondlevelPopulation and Demography
dc.subject.hlbtoplevelSocial Sciences
dc.contributor.affiliationumInstitute for Social Researchen
dc.contributor.affiliationumcampusAnn Arboren
dc.description.bitstreamurlhttp://deepblue.lib.umich.edu/bitstream/2027.42/50536/1/wp083.pdfen_US
dc.owningcollnameRetirement Research Center, Michigan (MRRC)


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