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On the Long-Run Evolution of Inheritance: France 1820--2050

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  • Thomas Piketty

Abstract

This article attempts to document and account for the long-run evolution of inheritance. We find that in a country like France the annual flow of inheritance was about 20--25% of national income between 1820 and 1910, down to less than 5% in 1950, and back up to about 15% by 2010. A simple theoretical model of wealth accumulation, growth, and inheritance can fully account for the observed U-shaped pattern and levels. Using this model, we find that under plausible assumptions the annual bequest flow might reach about 20--25% of national income by 2050. This corresponds to a capitalized bequest share in total wealth accumulation well above 100%. Our findings illustrate the fact that when the growth rate g is small, and when the rate of return to private wealth r is permanently and substantially larger than the growth rate (say, r = 4--5% versus g = 1--2%), which was the case in the nineteenth century and early twentieth century and is likely to happen again in the twenty-first century, then past wealth and inheritance are bound to play a key role for aggregate wealth accumulation and the structure of lifetime inequality. Contrary to a widespread view, modern economic growth did not kill inheritance. Copyright 2011, Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/qje/qjr020
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Article provided by Oxford University Press in its journal The Quarterly Journal of Economics.

Volume (Year): 126 (2011)
Issue (Month): 3 ()
Pages: 1071-1131

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Handle: RePEc:oup:qjecon:v:126:y:2011:i:3:p:1071-1131

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