Intergenerational transfers: How do they shape the German wealth distribution?

Addressing wealth and income inequality requires a thorough understanding of the mechanisms driving these disparities. Agent-Based Models (ABMs) offer a powerful tool for simulating these complex systems, capturing the intricate interplay of individual behaviors and emergent macroeconomic trends. Here we consider two existing ABM classes: one, exemplified by the Nirei-Souma (NS) model, which simulates how individuals accumulate wealth through income from work, returns on investments, and consumption, and the other, represented by the Bouchaud-Mezard (BM) model, which emphasizes the role of wealth exchanges and random returns in shaping the wealth distribution. Drawing on empirical evidence of wealth and income distribution in Italy, we benchmark both models revealing that they effectively captures Pareto-like wealth distribution, but fail to fully account for the persistent lack of social mobility observed in empirical data. To overcome this limitation, we propose an interacting version of the NS model, integrating it with wealth exchange mechanisms. Through this interacting model, we can show the influence of network topology on wealth distribution and dynamics. Simulations on hierarchical networks yield results that align more closely with empirical observations compared to regular random graphs, highlighting the importance of hierarchical interactions in shaping wealth inequality and social mobility. The model is further analyzed to reveal the interplay between income sources and wealth accumulation.

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ NDERSTANDING the nature of household savings behavior is critical in designing policies to promote savings and investment. Given the differences in the economic environment of the developing and industrial countries there should be substantial variation in the household behavior. Most of the empirical literature that analyzed cross-country savings behavior concentrated on aggregate savings due to the lack of consistent information on household behavior and possible differences in the household savings in developing versus industrial countries were disregarded. This study aims at examining the differences in household savings behavior in developing and industrial countries from a cross-country perspective. Household savings literature is based on two major hypotheses. Following the pioneering work of Keynes [21] which defines savings as a linear function of income, the first major breakthrough in savings literature is the permanent income hypothesis of Friedman [11]. This hypothesis differentiates permanent and transitory components of income as determinants of savings. Permanent income is defined in terms of the longtime income expectation over a planning period and a steady rate of consumption maintained over lifetime given the present level of wealth. Transitory income is the difference between actual and permanent income and since individuals are assumed not to consume out of this income category, marginal propensity to save on transitory income will be unity. Empirical tests of the permanent income hypothesis are mainly concerned with the effect of initial wealth on savings as well as the marginal propensities to save out of permanent and transitory components of income. However, the results of empirical studies on permanent income hypothesis are divergent for both developing and industrial countries [20] [13] [14] [15]. U

Recent studies by economists such as Piketty (2013, 2019) and Atkinson (2015) have contested the well-established view that post-war redistribution policies have been successful in the long term at slowing down the rise of structural inequalities. In reality, the claim goes, they have dealt mostly with reducing inequalities of income through redistribution and have left inequalities of wealth and capital ownership uncontrolled. These, according to their studies, have now risen in the developed world and reached levels more typical of 19th Century Europe. To make matters worse, perceptions of and attitudes towards fighting inequalities as unjust that Rawls saw as based on a wide consensus of citizens' "considered judgments" (Rawls, 1999, p. 17), have changed, leading to them being accepted as the justified and even necessary price to pay for economic growth and as a reward for merit. Economic arguments based on the need for incentives for raising productivity and the "trickle-down effect" have become widely accepted as if the price of economic efficiency should be disconnected from the demands of equity. Meritocracy has provided ethical arguments too. As John Roemer says, "today the most important problem for the social sciences of inequality is understanding how electorates have come to acquiesce to policies which increase inequality… and to try revealing the logic of the I would like to thank the editors of the Special Issue on Rawls for inviting me to develop ideas that I first presented in a previous paper published in French in 2016, "L'état-providence face aux inégalités et la démocratie de propriétaires: une comparaison entre Meade, Rawls, Ackerman et Piketty," Tocqueville Review, 2/2016), as well as in another paper in English in 2018: « Self-development and Social Justice ». I hope to be able to develop these ideas in a future book on property-owning democracy and its philosophical justifications.

Inequality, Concentration of Wealth and the Ownership Structure of Islamic Banks

Acknowledgments Introduction 1 James M. Poterba 1: Household Data on Saving Behavior in Canada 11 John B. Burbidge, James B. Davies. 2: Personal Saving in the United States 57 Orazio P. Attanasio 3: Household Saving Behavior in Japan 125 Noriyuki Takayama, Yukinobu Kitamura. 4: Household Saving Behavior in the United Kingdom 169 James Banks, Richard Blundell. 5: Savings in Germany - Part 2: Behavior 207 Axel Borsch-Supan 6: Personal Saving in Italy 237 Tullio Jappelli, Marco Pagano. Contributors 269 Author Index 271 Subject Index 273

The Risk of Divorce and Household Saving Behavior

We develop a simple behavioral model of intergenerational transfers, with individuals being subject to uncertainty about their children's incomes. Individuals differ with respect to innate ability and to wealth transfers they receive at birth. The distributions of total wealth, of total income, and of their components are uniquely determined from the equilibrium distribution of intergenerational transfers, for which existence and uniqueness are proven. For a particular utility function and provided that earned income follows a stable law, we show that so do all endogenous distributions. Intergenerational transfers are relatively more equally distributed than earnings, capital income, and lifetime wealth.

Purpose: This paper highlights the relevance of Savings Behavior and the impact of Social Influence on Savings Behavior in a developing country utilizing both life cycle and economic theories Methodology: This paper presents findings from a thorough review of the literature. Relevant articles were reviewed on both savings behavior and social influence. The articles consisted of both contexts developed versus developing. Findings: The findings suggest that from the developed country context, Social Influence positively affects Savings Behavior, which is not the case for the developing economies that show the negative impact of social influence on savings behavior. Therefore, financial education and literacy training are two of the means of encouraging individual self-control in these developing economies despite their vulnerability to social influence to encourage positive savings behavior. Implications: Individuals are encouraged to save, especially during their productive ages, along with their lifespan. This can be done by obligatory deductions for those that are officially employed. Originality/Value: This paper reveals a bibliography theoretical review on Social Influence and Savings Behavior within the developing country context. The paper presents the puzzle about the effect of Social Influence and Savings Behavior in the emerging economy. The majority of savings behavior research undertaken in the developed economies shows the positive effect of social influence on savings behavior, which is not the case in the developing economies.

Savings have been shown to have a positive impact on economic growth at the macroeconomic level. But, the micro-level analysis of households’ savings behavior is limited, especially in Sub-Saharan African economies. This study contributes to the understanding of the savings behavior of households in Africa, by modeling the savings behavior of households’ in Ethiopia with the two-part model. The results of the study reveal that number of extension contacts and access to market information have significant positive effects on the likelihood that a household would save. Moreover, land holdings (bad production season last year) have significant positive (adverse) impact on the expected amount of money a household would save. Based on the results of this study, policies are recommended to increase savings in Ethiopia.

On five hot issues on wealth distribution

2We assess the effect of a means and asset-tested social insurance program, Medicaid, on the savings behavior of households. We do so using both data on asset holdings and on consumption, matched to information on the eligibility of families for health insurance coverage under this program. Exogenous variation in Medicaid eligibility is provided by the dramatic expansion of this program over the 1984 to 1993 period. We document that Medicaid eligibility has a sizeable and significant negative effect on wealth holdings, and we confirm this finding by showing a strong positive association between Medicaid eligibility and consumption expenditures. We also exploit the fact that asset testing was phased out by the Medicaid program over this period to document that these Medicaid effects are much stronger in the presence of an asset test. One of the most striking regularities about savings behavior in the U.S. is the skewed nature of wealth holdings; the median asset/income ratio for households headed by a 35 to 44 year old high school dropout is one-tenth that of households headed by a 35 to 44 year old college graduate. In a provocative recent article, Hubbard, Skinner, and Zeldes (1995) (hereafter, HSZ) suggest that one

This paper scrutinizes the role of prolonged, expansionary monetary policy on the saving behavior of Japanese households, focusing on the dramatic change of the household savings rate since 1998, from high to low saving. The literature generally attributes this change to the country’s shift from high-growth to low-growth and its demographic change. This paper empirically examines changes in the incentives for saving and the ability to save connected to monetary policy. It finds that monetary policy had a significant impact on Japan’s household saving behavior via the interest rate channel but not the labor income channel. There is also evidence that rising government deficits come along with declining household saving and that rising wealth boosts saving.

The publication of Capital in the Twenty-First Century by Piketty (2014) propelled the debate about the prospects of the evolution of income and wealth inequalities in this century. One of the main controversies is about the effects on the income and wealth inequalities of a decrease in the growth rate g. In Piketty (2014), it is claimed that a decrease in g will cause an increase in the wealth inequality, through an increase in the difference r−g, where r is the rate of return on capital. This claim was criticized by many authors. In this chapter, the author presents a neoclassical growth model with heterogeneous agents and uses it to shed more light on this issue. The author’s model generalizes and improves previous models introduced in Piketty and Zucman (2015) and in Aoki and Nirei (2016). The author also presents a result, relating income, wealth, and wage inequalities.

This paper surveys and analyzes the available evidence on the distribution of wealth in Australia. On the basis of this evidence, it is argued that the cross‐section distribution of personal wealth reveals considerable concentration in the top tail, with the top 1 per cent of adult individuals holding around 25 per cent of private wealth. The inequality of wealth revealed in the cross‐section distribution among the top 10 per cent of wealth holders is not significantly reduced when adjustments are made to correct for life‐cycle influences. Although the proportion of wealth held by the top 1 per cent of adult individuals has decreased sharply since World War I, the second to tenth percentiles have almost the same proportion in the 1960s and 1970s as in 1915.

A one-off wealth tax for Belgium: Revenue potential, distributional impact, and environmental effects