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Bequests and Aggregate Wealth Accumulation in Germany

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  • Anette Reil-Held

    (University of Mannheim, Department of Economics, A5, D-68131 Mannheim)

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    Abstract

    This paper estimates the proportion of current wealth in Germany which is generated by intergenerational bequests. It begins with the flow-of-bequests approach which cumulates annual flows of bequests into a stock of transfer wealth. Assuming exponential growth of the economy, inherited wealth accounts for about 35 per cent of total wealth in Germany, a figure comparable to that obtained for other countries. However, the assumptions underlying this estimate are inappropriate for Germany, because they fail to take account of the special circumstances of the postwar period. Modifying the flow-of-bequests method to allow for these special circumstances reduces the share of inherited wealth to about 10 per cent, surprisingly low in comparison to other countries.To confirm this result, a further method was developed based on a regression model of wealth as a function of socio-economic variables. The wealth of the nation is estimated with bequests included, and the contribution of bequests is then calculated by setting bequests equal to zero. This result again produces a share of about 10 per cent for inherited wealth, making this figure the most plausible value for Germany in the 1980s. However, the share can be expected to increase in future. The Geneva Papers on Risk and Insurance (1999) 24, 50–63. doi:10.1111/1468-0440.00004

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    Bibliographic Info

    Article provided by Palgrave Macmillan in its journal The Geneva Papers on Risk and Insurance.

    Volume (Year): 24 (1999)
    Issue (Month): 1 (January)
    Pages: 50-63

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    Handle: RePEc:pal:gpprii:v:24:y:1999:i:1:p:50-63

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    Cited by:
    1. Axel Börsch-Supan & Anette Reil-Held & Ralf Rodepeter & Reinhold Schnabel & University of Mannheim & Germany, 2000. "Household Savings in Germany," Macroeconomics, EconWPA 0004053, EconWPA.
    2. Börsch-Supan, Axel & Reil-Held, Anette & Rodepeter, Ralf & Schnabel, Reinhold & Winter, Joachim, 2000. "The German Savings Puzzle," Sonderforschungsbereich 504 Publications, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim 01-07, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    3. Axel Börsch-Supan, 2002. "International Comparison of Household Savings Behaviour: The German Savings Puzzle," MEA discussion paper series, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy 02006, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    4. Annamaria Lusardi, 2002. "Saving Viewed from a Cross-National Perspective," MEA discussion paper series, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy 02024, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    5. Axel Borsch-Supan & Lothar Essig, 2003. "Household Saving in Germany: Results of the first SAVE study," NBER Working Papers 9902, National Bureau of Economic Research, Inc.
    6. Börsch-Supan, Axel & Reil-Held, Anette & Rodepeter, Ralf & Schnabel, Reinhold & Winter, Joachim, 2000. "Household Savings in Germany," Discussion Papers, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre 577, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
    7. Börsch-Supan, Axel & Reil-Held, Anette & Rodepeter, Ralf & Schnabel, Reinhold & Winter, Joachim, 1999. "Ersparnisbildung in Deutschland: Meßkonzepte und Ergebnisse auf Basis der EVS," Sonderforschungsbereich 504 Publications, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim 99-02, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.

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