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Bequests, taxation and the distribution of wealth in a general equilibrium model

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Author Info
Bossmann, Martin
Kleiber, Christian
Walde, Klaus

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Abstract

This paper examines the role of bequests and of taxation on bequests for the distribution of wealth. We investigate a model with overlapping generations and heterogenous households where parents derive utility directly from their bequests. We obtain all results analytically. Using the coefficient of variation as the measure of inequality, bequests per se diminish the inequality of wealth since they raise private savings and hence average wealth holdings more than the variance of wealth. From a policy perspective, taxing bequests and redistributing government revenue lump-sum among the young generation further decreases wealth inequality.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 91 (2007)
Issue (Month): 7-8 (August)
Pages: 1247-1271
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Handle: RePEc:eee:pubeco:v:91:y:2007:i:7-8:p:1247-1271

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Web page: http://www.elsevier.com/locate/inca/505578

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References listed on IDEAS
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  3. Cremer, Helmuth & Pestieau, Pierre, 2001. "Non-linear taxation of bequests, equal sharing rules and the tradeoff between intra- and inter-family inequalities," Journal of Public Economics, Elsevier, vol. 79(1), pages 35-53, January. [Downloadable!] (restricted)
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  5. Davies, James B, 1986. "Does Redistribution Reduce Inequality?," Journal of Labor Economics, University of Chicago Press, vol. 4(4), pages 538-59, October. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Francisco Alvarez-Cuadrado & Ngo Van Long, 2009. "Envy And Inequality," Departmental Working Papers 2009-03, McGill University, Department of Economics. [Downloadable!]
  2. Johann K. Brunner & Susanne Pech, 2008. "Optimum Taxation of Inheritances," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  3. Volker Grossmann & Panu Poutvaara, 2005. "Pareto-Improving Bequest Taxation," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  4. Jordi Caballé & Ana I. Moro Egido, 2008. "The Effect of Aspirations, Habits, and Social Security on the Distribution of Wealth," ThE Papers 08/02, Department of Economic Theory and Economic History of the University of Granada.. [Downloadable!]
  5. Graziella Bertocchi, 2007. "The Comparative Evolution of Bequest Taxation in Historical Perspective," Center for Economic Research (RECent) 005, University of Modena and Reggio E., Dept. of Economics. [Downloadable!]
  6. Holger Strulik & Volker Grossmann, 2008. "Should Continued Family Firms Face Lower Taxes than other Estates?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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