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Intergenerational links, taxation, and wealth distribution

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  • Wan, Jing
  • Zhu, Shenghao

Abstract

We extend one of the main findings in Bossmann et al. (2007)("Bequests, taxation and the distribution of wealth in a general equilibrium model," Journal of Public Economics, 91, 1247-1271). Bequest motives per se reduce wealth inequality. We show that the result holds for a stronger criterion of inequality comparison between distributions. Bossmann et al. (2007) use the coefficient of varation as the inequality measure. Our Lorenz dominance result implies their result. We also strengthen two other conclusions in Bossmann et al. (2007). Earnings ability inheritance could increase wealth inequality and estate taxes could decrease wealth inequality.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 39511.

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Date of creation: 18 Jun 2012
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Handle: RePEc:pra:mprapa:39511

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Keywords: Wealth inequality; Bequest motives; Inheritance of earings ability; Estate taxes; Lorenz dominance;

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  1. S. Rao Aiyagari, 1993. "Uninsured idiosyncratic risk and aggregate saving," Working Papers 502, Federal Reserve Bank of Minneapolis.
  2. Sexauer, Martin & Kleiber, Christian & Wälde, Klaus, 2005. "Bequests, taxation and the distribution of wealth in a general equilibrium model," W.E.P. - Würzburg Economic Papers 61, University of Würzburg, Chair for Monetary Policy and International Economics.
  3. Mariacristina De Nardi, 2002. "Wealth inequality and intergenerational links," Staff Report 314, Federal Reserve Bank of Minneapolis.
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  8. Michael Rothschild & Joseph E. Stiglitz, 1972. "Some Further Results on the Measurement of Inequality," Cowles Foundation Discussion Papers 344, Cowles Foundation for Research in Economics, Yale University.
  9. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  10. Ana Castaneda & Javier Diaz-Gimenez & Jose-Victor Rios-Rull, 2003. "Accounting for the U.S. Earnings and Wealth Inequality," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 818-857, August.
  11. Gajdos, Thibault & Weymark, John A., 2012. "Introduction to inequality and risk," Journal of Economic Theory, Elsevier, vol. 147(4), pages 1313-1330.
  12. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
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