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The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records

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  • Kreiner, Claus Thustrup
  • Kopczuk, Wojciech
  • Boserup, Simon H.

Abstract

Using Danish administrative data, we estimate the impact of bequests on the level and inequality of wealth. We employ an event study design where we follow the distribution of wealth over time of people who are 45-50 years old, and divided into treatment group and control group depending on whether a parent dies or not. Bequests account for 26 percent of the average post-bequest wealth 1-3 years after parental death and significantly affect wealth throughout the distribution. We find that bequests increase measures of absolute wealth inequality (variance), but reduce relative inequality (top wealth shares). Following the receipts of bequests, variance of the distribution censored at the top/bottom 1% increases by 33 percent, but the top 1% share declines by 6 percentage points from an initial level of 31 percent and the top 10% share declines by 10 percentage points from a base of around 81 percent.

Suggested Citation

  • Kreiner, Claus Thustrup & Kopczuk, Wojciech & Boserup, Simon H., 2016. "The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records," CEPR Discussion Papers 11059, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11059
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    References listed on IDEAS

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    More about this item

    Keywords

    Bequests; Intergenerational mobility; Wealth; Wealth inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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