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Bequest motive, household portfolio choice, and wealth inequality in urban China

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  • Yang, Xintong
  • Gan, Li

Abstract

This paper studies the role of bequest motives in household portfolio choices and wealth inequality using a computable incomplete-market life-cycle model with precautionary saving motives, accidental bequests and voluntary bequests. Calibrating the model to match the main features of household finance in China Household Finance Survey, we quantitatively measure the effect of voluntary bequest motives on the household portfolio choices and the wealth distribution in urban China. Our results indicate the importance of bequest motives in shaping the Chinese household portfolio choices and wealth inequality, and have the policy implication on the implementation of inheritance taxes to alleviate the wealth concentration and to promote household consumption in contemporary China.

Suggested Citation

  • Yang, Xintong & Gan, Li, 2020. "Bequest motive, household portfolio choice, and wealth inequality in urban China," China Economic Review, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:chieco:v:60:y:2020:i:c:s1043951x19301609
    DOI: 10.1016/j.chieco.2019.101399
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    5. Pieter Van Rymenant, 2022. "Bequests and the estate tax. A review of theory and (new) evidence," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 22/1055, Ghent University, Faculty of Economics and Business Administration.

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