The effect of aspirations, habits, and social security on the distribution of wealth Caballé, Jordi Moro Egido, Ana Isabel Aspirations Habits Wealth distribution Social security In this paper, we analyze how the introduction of habits and aspirations affects the distribution of wealth when individuals’ labor productivity is subject to idiosyncratic shocks and bequests arise from a joy-of-giving motive. In the presence of either bequests or aspirations, labor income shocks are transmitted intergenerationally and this transmission, together with the contemporaneous income shocks, determines the stationary distribution of wealth. We show that the introduction of aspirations increases both the intragenerational variability of wealth and the corresponding degree of intergenerational mobility. The opposite result holds when habits are introduced. Finally, we discuss how aspirations and habits interact with the redistributive features of an unfunded social security system. 2014-05-02T10:10:07Z 2014-05-02T10:10:07Z 2008 report Caballé, J.; Moro-Egido, A. The effect of aspirations, habits, and social security on the distribution of wealth. Universidad de Granada. Departamento de Teoría e Historia Económica (2008). (The Papers; 08/02). [http://hdl.handle.net/10481/31511] http://hdl.handle.net/10481/31511 eng The Papers;08/02 http://creativecommons.org/licenses/by-nc-nd/3.0/ open access Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License Universidad de Granada. Departamento de Teoría e Historia Económica