Working Paper: NBER ID: w0445
Authors: Laurence J. Kotlikoff; Lawrence Summers
Abstract: This paper uses historicaI U.S. data to directly estimate the contribution of intergenerational transfers to aggregate capital accumulation. The evidence presented indicates that intergenerational transfers account for the vast majority of aggregate U .S. capital formation; only a negligible fraction of actual capital accumulation can be traced u, life-cycle or "hump" savings. A major difference between this study and previous investigations of this issue is the use of more accurate longitudinal age-earnings and age-consumption profiles. These profiles are simply too flat to generate substantial lifecycle savings. This paper suggests the importance of and need for substantially greater research and data collection on intergenerational transfers. fife-cycle models of savings that emphasize savings for retirement as the dominant form of apical accumulation should give way to models that illuminate the determinants of intergenerational transfers.
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JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Intergenerational transfers (D15) | Capital accumulation (E22) |
| Life cycle theory (D25) | Capital formation (E22) |
| Absence of intergenerational transfers (D15) | Stock of life cycle wealth (E21) |
| Lifetime consumption and earnings profiles (D15) | Life cycle savings (D15) |
| Life cycle theory (without intergenerational transfers) (D15) | Poor description of capital accumulation (E22) |