SNDE is always a great opportunity to see state-of-the-art presentations and interact with empirical macro community. This year, our paper was invited to San Antonio. If that was not enough, fantastic keynotes: Oliver Coibon and Eric T. Swanson. 

Our paper analyzes the contribution of rising longevity to the increase in wealth inequality in the U.S. over the past seventy years. To do so, we construct an overlapping generations (OLG) model with multiple sources of inequality, carefully calibrated to the data. Our key finding is that improvements in old-age longevity have a substantial impact on wealth inequality, accounting for approximately half the effect of income inequality, which has been the focus of much of the existing literature. In contrast, the impact of tax changes is relatively minor. The contribution of rising longevity is expected to continue driving wealth inequality upward in the coming decades.

The U.S. experienced a colossal increase in life expectancy, especially in old-age longevity. Between 1970 and 2015, life expectancy at 65 has improved from slightly above 14 years to nearly 19 years. Through the lens of any standard overlapping generations model, this rise in longevity can translate to an increase in wealth inequality due to two mechanisms. First, since individuals expect to live longer, a behavioral effect involves higher wealth accumulation at the peak of the life cycle for each subsequent birth cohort. Second, a composition effect appears due to a rising share of individuals close to the peak of wealth accumulation. In this paper, we quantify the role of demographics in rising wealth inequality and juxtapose it with income inequality.