The Great Recession saw sharp drops in labor earnings and in asset prices. How were the welfare losses from these declines distributed across different age groups? To answer this question we construct a stochastic overlapping-generations general equilibrium model in which households are subject to aggregate shocks that affect both earnings and asset valuations. A calibrated version of the model predicts that younger cohorts fare better than older cohorts when the equilibrium decline in the

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... of risky assets is large relative to the decline in wages. This finding emerges since the old partially rely on sales of risky assets to finance consumption, whereas the young accumulate wealth for life cycle reasons, and now purchase assets at depressed prices. In a calibrated version of our model, aggregate net worth declines by 20 percent relative to trend over a ten year interval, consistent with the experience of the U.S. economy. Average labor incomes decline 10 percent, but young households face even larger earnings declines. The model predicts that the Great Recession implied modest average welfare losses for households in the 20-29 age group, but very large welfare losses of around 10% of lifetime consumption for households aged 60 and older.