Retirement Wealth Inequality: A Critical and Institutional Review

This dissertation presents an institutional analysis of wealth accumulation processes of United
States working-class households as the main determinant of inequality in living standards at older ages.
The first chapter describes why retirement wealth inequality matters and how it should be
measured in an institutional framework. I describethe pattern of wealth accumulation among different
socioeconomic groups and the importance of retirement wealth, both as a share of household wealth
and as the main source of income and determinant of living standards at older ages. I argue for separate
analysis of retirement wealth from other components of household wealth (home equity and nonretirement financial wealth) due to its different functions, and the institutions of wealth accumulation
and consumption formed around these functions.
The second chapter discusses the measurement of retirement wealth inequality and the
methodological challenges it raises. I identify the technical and methodological issues regarding the
availability and accuracy of data, which can undermine the results of previous studies on similar or
related topics. I suggest and utilize a method for correcting inaccuracies in self-reported survey data
from the Health and Retirement Study (HRS) with linked administrative data on retirement plans
and earnings. I use the adjusted data to calculate retirement wealth inequality among employees – ages
51 to 56 – in years 1992, 1998, 2004, and 2010. I find that retirement wealth has historically been
distributed unequally and that low-income workers were in even worse-off at the end of the period of
study than at the beginning, even though the overall change in some measures of retirement wealth
inequality may seem insignificant.
In the third chapter, using data from two consecutive waves of the Survey of Income and
Program Participation (SIPP) in 2011 and 2012, I showcase the socioeconomic disparities in facing
economic shocks and the disparate effects of such shocks on retirement wealth accumulation in defined
contribution (DC) plans. Compared to high income workers, low income workers are more exposed
to adverse economic shocks. They are also more likely to withdraw their retirement savings after facing
such shocks, possibly due to a lack of other emergency funds. The results demonstrate how
socioeconomic status and institutional factors can affect retirement wealth accumulation processes
beyond that which can be explained through their effects on wage distributions.