The impact of demographic change on intergenerational transfers via bequests

Background: Transfers in the form of bequests have important implications for the intergenerational transmission of inequality. Demographic change has relevant consequences for the timing and size of bequests. For example, longer life implies that people receive bequests when they are older. Conversely, increasing generational length reduces the average age at which people are given bequests. Objective: We analyze the consequences of demographic change in the United States on timing over the life course when individuals receive an inheritance and on the size of bequests. Methods: We evaluate trends in life expectancy at the mean age at childbearing as a proxy for timing at receipt of bequests. We complement formal demographic analysis with empirical estimates from the Panel Study of Income Dynamics (PSID) inheritance data for 1987-2010. Results: We find that the long-term trend of increasing age at receipt of bequests might have stalled, mainly because of changes in the timing of fertility. In the long term the upward trend in age at which people receive bequests may resume, as the expected linear gains in life expectancy will more than counteract recent increases in the mean age at childbearing. Conclusions: We showed that demographic change affects the size of bequests and the timing over the life course when people receive them. As the need for economic resources varies over the life cycle, changes in the timing at receipt of bequests may have a differential impact on wealth inequality and affect patterns of multigenerational transfers of resources.