Wealth Inequality: Lifetime and Cross-Sectional Views

The distribution of income and wealth are generally regarded as key performance indicators of a society. Cross-sectional analyses of Australian income and wealth distributions at various points in time have found that both are highly unequal. However, lifetime distributions may be quite different. This paper provides some insight into the differences for one of these distributions – wealth.

A dynamic microsimulation model of the Australian population is used to project the cross-sectional and lifetime asset holdings of a 5-year birth cohort over a period of 40 years. The annual personal net worth of this birth cohort are analysed in regard to age and net worth, the changing wealth distribution within the cohort, wealth mobility, and a comparison of lifetime and cross-sectional distributions.