Volume 29, Number 4 (Fall) 1994
Lee, Ronald D. with the assistance of Timothy Miller. 1994. "Population Age Structure, Intergenerational Transfers, and Wealth: A New Approach, with Applications to the United States." Journal of Human Resources 29(4):1027-1963.
Resources are reallocated across age and time by means of capital accumulation, credit transactions, and transfers. Each takes place through three channels: the family, financial markets, and public sector programs. These age-specific flows give rise to stocks, of age-specific wealth. Weighting by population age distribution and summing yields aggregate wealth, which equals capital plus transfer wealth; the aggregate credit balance must be zero. Forms of aggregate wealth are related to properties of the macroeconomy. A framework is developed for relating flows to stocks. Flows and stocks for the United States in 1987 are analyzed by applying this framework to the 1987 CES. For example, the average household has about 100K in federal wealth, a debt of 15K in state/local wealth, and a debt of 10K in interhousehold family transfers.
Ronald D. Lee is in demography and economics at the University of California at Berkley; Timothy Miller is in demography at the University of California at Berkley. The authors are grateful to Robert Willis for many helpful discussions, and for the extensive use made of his earlier work; and to Michael Anderson for excellent research assistance. Finis Welch, David Weil, and other participants in the RAND-National Institute on Aging workshop on intergenerational relations provided many useful suggestions and criticisms. Comments from an anonymous reviewer are appreciated. Research support from the Institute for International Studies of the University of California at Berkley is gratefully acknowledged. The 1987 Consumer Expenditure Survey, which is the primary data source for this paper, is in the public domain.
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