Journal Article

Do the rich save more? Evidence from linked survey and administrative data

Date: 04 October 2017
Publisher: Oxford Academic
Published in: Oxford Economic Papers , Vol. 69, No. 4, pp. 1101–1119
JEL classification: D12, D91, C81
DOI: 10.1093/oep/gpx024

The nature of the relationship between lifetime income and saving rates is a longstanding empirical question and one that has been surprisingly difficult to answer. We use a new data set containing both individual survey data on wealth holdings and administrative data on earnings histories to examine this question. We find, for a sample of English households, evidence of a positive relationship between the rate of private wealth accumulation and levels of lifetime earnings. Even when state pension wealth is included, the top quintile of lifetime earnings have significantly higher wealth to lifetime earnings ratios than the other quintiles. Under this broad measure of wealth, those in the middle of the distribution of lifetime earnings accumulate the least wealth relative to their earnings.