The age-wealth profile and the life-cycle hypothesis: A cohort analysis with a time series of cross-sections of Italian households

In this paper I estimate the age-wealth profile under two different identif ication assumptions about age, cohort and time effects. According to the li fe-cycle model, the two sets of assumptions should yield similar age-wealth profiles. Using the 1984-93 Italian Survey of Household Income and Wealth, the estimated average annual rate of wealth decumulation in old age is fou nd to be between 3 and 6 percent. As in the life-cycle model, the cohort ef fect increases with year of birth. However, the results also uncover consid erable population heterogeneity: the rates of wealth decumulation are much lower for rich households and households headed by individuals with higher education.