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

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  • Bossmann, Martin
  • Kleiber, Christian
  • Walde, Klaus

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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Bibliographic Info

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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Citations

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Cited by:
  1. Graziella Bertocchi, 2011. "The Vanishing Bequest Tax: The Comparative Evolution Of Bequest Taxation In Historical Perspective," Economics and Politics, Wiley Blackwell, vol. 23(1), pages 107-131, 03.
  2. Grossmann, Volker & Poutvaara, Panu, 2006. "Pareto-Improving Bequest Taxation," IZA Discussion Papers 2277, Institute for the Study of Labor (IZA).
  3. 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..
  4. Johann K. Brunner & Susanne Pech, 2008. "Optimum taxation of inheritances," Economics working papers 2008-06, Department of Economics, Johannes Kepler University Linz, Austria.
  5. Holger Strulik & Volker Grossmann, 2008. "Should Continued Family Firms Face Lower Taxes than other Estates?," CESifo Working Paper Series 2235, CESifo Group Munich.
  6. Heijdra, Ben J. & Ligthart, Jenny E., 2007. "Fiscal policy, monopolistic competition, and finite lives," Journal of Economic Dynamics and Control, Elsevier, vol. 31(1), pages 325-359, January.
  7. Francisco Alvarez-Cuadrado & Ngo Van Long, 2009. "Envy And Inequality," Departmental Working Papers 2009-03, McGill University, Department of Economics.
  8. Wan, Jing & Zhu, Shenghao, 2012. "Intergenerational links, taxation, and wealth distribution," MPRA Paper 39511, University Library of Munich, Germany.

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