ORIGINAL ARTICLE
Private Wealth Over the Life Cycle: A Meeting Between Microsimulation and Structural Approaches
Lino Galiana, Lionel Wilner,
Corresponding Author
Lionel Wilner
Crest
Correspondence to:: Lionel Wilner, Crest, 5 avenue Henry le Chatelier, 91120, Palaiseau, France ([email protected]).
Search for more papers by this authorLino Galiana, Lionel Wilner,
Corresponding Author
Lionel Wilner
Crest
Correspondence to:: Lionel Wilner, Crest, 5 avenue Henry le Chatelier, 91120, Palaiseau, France ([email protected]).
Search for more papers by this authorFirst published: 28 May 2024
Note: We are indebted to Théo Guichaoua for outstanding research assistance. We are grateful to Mathias André, Luc Arrondel, Carole Bonnet, Nicolas Drouhin, François Le Grand, André Masson, Benoît Rapoport, Sébastien Roux, and Maxime Tô for valuable comments as well as to the attendees of the 37th Journées de Microéconomie Appliquée (Annecy 2021, on-line) conference, of the “Pensions and ageing” workshop (CDC Paris, 2019), and of the Insee-D2E (Paris 2019) seminar.
Abstract
This paper embeds a structural model of private wealth accumulation over the life cycle within a dynamic microsimulation model designed for long-run projections of pensions. In such an environment, the optimal savings path results from consumption smoothing and bequests motives, on top of the mortality risk. Preferences are estimated based on a longitudinal wealth survey through a method of simulated moments. Simulations issued from these estimations replicate quite well a private wealth that is more concentrated than labor income. They enable us to compute “augmented” standards of living including capital income, hence to quantify both the countervailing role played by private wealth to earnings dropout after retirement and the impact of the mortality risk in this regard.
Supporting Information
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