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The life-cycle dynamics of wealth mobility

Author

Listed:
  • Richard Audoly

    (Institute for Fiscal Studies)

  • Rory McGee

    (Institute for Fiscal Studies)

  • Sergio Ocampo

    (Western University, London, Ontario)

  • Gonzalo Paz-Pardo

    (Institute for Fiscal Studies)

Abstract
We use 25 years of tax records for the Norwegian population to study the mobility of wealth over people’s lifetimes. We find considerable wealth mobility over the life cycle. To understand the underlying mobility patterns, we group individuals with similar wealth rank histories using agglomerative hierarchical clustering, a tool from statistical learning. The mobility patterns we elicit provide evidence of segmented mobility. Over 60 percent of the population remains at the top or bottom of the wealth distribution throughout their lives. Mobility is driven by the remaining 40 percent, who move only within the middle of the distribution. Movements are tied to differential income trajectories and business activities across groups. We show parental wealth is the key predictor of who is persistently rich or poor, while human capital is the main predictor of those who rise and fall through the middle of the distribution. JEL Classification: D31, E21, C23, C38, C55
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Richard Audoly & Rory McGee & Sergio Ocampo & Gonzalo Paz-Pardo, 2024. "The life-cycle dynamics of wealth mobility," IFS Working Papers W24/12, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:24/12
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving

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