This paper offers an explanation for the puzzle of low wealth holdings among a significant fraction of the elderly. Instead of invoking irrational, non-rational, or non-optimal behavior to resolve the puzzle, it is shown that widespread low wealth holdings are consistent with a rational...

This note presents a very simple method for deriving the necessary optimality conditions for optimal control of jump (point) processes. By means of Bellman's principle of optimality, the original stochastic control problem is transformed into a simple optimization problem. The derivation is...

This paper presents a theoretical investigation of the dynamic effects of social security on individual consumption, wealth and welfare. The framework of analysis is Yaari's (1965) life-cycle model of saving with uncertain lifetime and borrowing constraint. A simple uniform social security...

This article proposes a formal model of migration in which workers are heterogeneous and markets are stochastically correlated. We derive and characterize the optimal migration pattern of a family. We show that migration can take place even when migrants earn less abroad and, surprisingly, when...

This paper formulates a stochastic dynamic model of fertility to evaluate the assumptions that underlie the widely used econometric tests for parental sex preferences. Unlike previous work on dynamic models of fertility, several tractable and testable predictions are established. It is shown...