IDEAS home Printed from https://ideas.repec.org/a/oup/oxecpp/v74y2022i3p643-670..html
   My bibliography  Save this article

Wealth inequality, intergenerational transfers, and family background
[Intergenerational wealth mobility and the role of inheritance: Evidence from multiple generations]

Author

Listed:
  • Juan C Palomino
  • Gustavo A Marrero
  • Brian Nolan
  • Juan G Rodríguez

Abstract

We estimate the contribution of intergenerational transfers (inheritances and gifts) and family background to wealth inequality in four OECD countries: France, Spain, Great Britain, and the USA. We compare the observed wealth distribution with a non-parametric counterfactual distribution where all differences in wealth associated with intergenerational transfers and family background are removed. Despite the diversity of the countries analysed, we find similar patterns. The combined contribution of intergenerational transfers and family background to wealth inequality is sizeable in the four countries, ranging from 36% in Great Britain to 49% in the USA. When interactions between the two factors are accounted for, and the Shapley value decomposition is used to fully disentangle the contribution of each factor based on its marginal contribution, intergenerational transfers account for between 26% in Great Britain and 36% of wealth inequality in France, with family background ranging from 9% in France to 17% in the USA.

Suggested Citation

  • Juan C Palomino & Gustavo A Marrero & Brian Nolan & Juan G Rodríguez, 2022. "Wealth inequality, intergenerational transfers, and family background [Intergenerational wealth mobility and the role of inheritance: Evidence from multiple generations]," Oxford Economic Papers, Oxford University Press, vol. 74(3), pages 643-670.
  • Handle: RePEc:oup:oxecpp:v:74:y:2022:i:3:p:643-670.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/oep/gpab052
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Alvaredo, Facundo & Atkinson, Anthony B. & Morelli, Salvatore, 2018. "Top wealth shares in the UK over more than a century," Journal of Public Economics, Elsevier, vol. 162(C), pages 26-47.
    2. Thomas F. Crossley & Cormac O'Dea & Facundo Alvaredo & Anthony B. Atkinson & Salvatore Morelli, 2016. "The Challenge of Measuring UK Wealth Inequality in the 2000s," Fiscal Studies, Institute for Fiscal Studies, vol. 37, pages 13-33, March.
    3. Thomas F. Crossley & Cormac O'Dea & Rowena Crawford & Andrew Hood, 2016. "Lifetime Receipt of Inheritances and the Distribution of Wealth in England," Fiscal Studies, Institute for Fiscal Studies, vol. 37, pages 55-75, March.
    4. Juan C. Palomino & Gustavo A. Marrero & Juan G. Rodríguez, 2019. "Channels of Inequality of Opportunity: The Role of Education and Occupation in Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 143(3), pages 1045-1074, June.
    5. Simon H. Boserup & Wojciech Kopczuk & Claus T. Kreiner, 2016. "The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records," American Economic Review, American Economic Association, vol. 106(5), pages 656-661, May.
    6. Pedro Salas-Rojo & Juan Gabriel Rodríguez, 2021. "The distribution of wealth in Spain and the USA: the role of socioeconomic factors," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 12(3), pages 389-421, September.
    7. John E. Roemer & Alain Trannoy, 2016. "Equality of Opportunity: Theory and Measurement," Journal of Economic Literature, American Economic Association, vol. 54(4), pages 1288-1332, December.
    8. Daniele Checchi & Vito Peragine, 2010. "Inequality of opportunity in Italy," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 8(4), pages 429-450, December.
    9. Garbinti, Bertrand & Goupille-Lebret, Jonathan & Piketty, Thomas, 2018. "Income inequality in France, 1900–2014: Evidence from Distributional National Accounts (DINA)," Journal of Public Economics, Elsevier, vol. 162(C), pages 63-77.
    10. Bagchi, Sutirtha & Svejnar, Jan, 2015. "Does wealth inequality matter for growth? The effect of billionaire wealth, income distribution, and poverty," Journal of Comparative Economics, Elsevier, vol. 43(3), pages 505-530.
    11. PESTIEAU, Pierre, 1984. "The effects of varying family size on the transmission and distribution of wealth," LIDAM Reprints CORE 594, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    12. Adrian Adermon & Mikael Lindahl & Daniel Waldenström, 2018. "Intergenerational Wealth Mobility and the Role of Inheritance: Evidence from Multiple Generations," Economic Journal, Royal Economic Society, vol. 128(612), pages 482-513, July.
    13. Elinder, Mikael & Erixson, Oscar & Waldenström, Daniel, 2018. "Inheritance and wealth inequality: Evidence from population registers," Journal of Public Economics, Elsevier, vol. 165(C), pages 17-30.
    14. Facundo Alvaredo & Cecilia García-Peñalosa, 2018. "Top incomes, wealth and inheritance: special issue in homage to Tony Atkinson," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(2), pages 131-136, June.
    15. Ruut Veenhoven, 1991. "Is happiness relative?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 24(1), pages 1-34, February.
    16. Frank A Cowell & Emmanuel Flachaire, 2018. "Inequality Measurement and the Rich: Why inequality increased more than we thought," STICERD - Public Economics Programme Discussion Papers 36, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    17. Facundo Alvaredo & Bertrand Garbinti & Thomas Piketty, 2017. "On the Share of Inheritance in Aggregate Wealth: Europe and the USA, 1900–2010," Economica, London School of Economics and Political Science, vol. 84(334), pages 239-260, April.
    18. Piketty, Thomas & Zucman, Gabriel, 2014. "Wealth and Inheritance in the Long Run," CEPR Discussion Papers 10072, C.E.P.R. Discussion Papers.
    19. Pestieau, Pierre, 1984. "The Effects of Varying Family Size on the Transmission and Distribution of Wealth," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 400-417, November.
    20. Fleurbaey, Marc, 2012. "Fairness, Responsibility, and Welfare," OUP Catalogue, Oxford University Press, number 9780199653591, Decembrie.
    21. Thomas Goda, 2018. "The global concentration of wealth [Persistence of power, elites, and institutions]," Cambridge Journal of Economics, Oxford University Press, vol. 42(1), pages 95-115.
    22. Frédéric Chantreuil & Alain Trannoy, 2013. "Inequality decomposition values: the trade-off between marginality and efficiency," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 11(1), pages 83-98, March.
    23. Anthony Shorrocks, 2013. "Decomposition procedures for distributional analysis: a unified framework based on the Shapley value," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 11(1), pages 99-126, March.
    24. Juan Gabriel Rodríguez & Rafael Salas & Irene Perrote, 2005. "Partial Horizontal Inequity Orderings: A Non‐parametric Approach," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 67(3), pages 347-368, June.
    25. Jesse Bricker & Alice Henriques & Jacob Krimmel & John Sabelhaus, 2016. "Measuring Income and Wealth at the Top Using Administrative and Survey Data," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 261-331.
    26. Hayfield, Tristen & Racine, Jeffrey S., 2008. "Nonparametric Econometrics: The np Package," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 27(i05).
    27. James B. Davies & Rodrigo Lluberas & Anthony F. Shorrocks, 2017. "Estimating the Level and Distribution of Global Wealth, 2000–2014," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(4), pages 731-759, December.
    28. Olympia Bover, 2010. "Wealth Inequality And Household Structure: U.S. Vs. Spain," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(2), pages 259-290, June.
    29. Dasgupta, Partha & Sen, Amartya & Starrett, David, 1973. "Notes on the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 6(2), pages 180-187, April.
    30. Gabriel Zucman, 2019. "Global Wealth Inequality," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 109-138, August.
    31. Marrero, Gustavo A. & Rodríguez, Juan G., 2013. "Inequality of opportunity and growth," Journal of Development Economics, Elsevier, vol. 104(C), pages 107-122.
    32. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-920, July.
    33. Pedro Salas-Rojo & Juan Gabriel Rodríguez, 2019. "The distribution of wealth in the U.S. and Spain: the role of socio-economic factors," Working Papers 506, ECINEQ, Society for the Study of Economic Inequality.
    34. Paul Hufe & Andreas Peichl & John Roemer & Martin Ungerer, 2017. "Inequality of income acquisition: the role of childhood circumstances," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 49(3), pages 499-544, December.
    35. Emmanuel Saez & Gabriel Zucman, 2016. "Editor's Choice Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, Oxford University Press, vol. 131(2), pages 519-578.
    36. Marcus Drometer & Marco Frank & Maria Hofbauer Pérez & Carla Rhode & Sebastian Schworm & Tanja Stitteneder, 2018. "Wealth and Inheritance Taxation: An Overview and Country Comparison," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 16(02), pages 45-54, August.
    37. Facundo Alvaredo & Bertrand Garbinti & Thomas Piketty, 2017. "On the Share of Inheritance in Aggregate Wealth: Europe and the USA, 1900–2010," Post-Print halshs-01509650, HAL.
    38. Karagiannaki, Eleni, 2017. "The impact of inheritance on the distribution of wealth: evidence from Great Britain," LSE Research Online Documents on Economics 62622, London School of Economics and Political Science, LSE Library.
    39. Solon, Gary, 1992. "Intergenerational Income Mobility in the United States," American Economic Review, American Economic Association, vol. 82(3), pages 393-408, June.
    40. Frank Cowell & Eleni Karagiannaki & Abigail McKnight, 2019. "The changing distribution of wealth in the pre-crisis US and UK: the role of socio-economic factors," Oxford Economic Papers, Oxford University Press, vol. 71(1), pages 1-24.
    41. Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September.
    42. Eleni Karagiannaki, 2017. "The Impact of Inheritance on the Distribution of Wealth: Evidence from Great Britain," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(2), pages 394-408, June.
    43. Scheve, Kenneth & Stasavage, David, 2012. "Democracy, War, and Wealth: Lessons from Two Centuries of Inheritance Taxation," American Political Science Review, Cambridge University Press, vol. 106(1), pages 81-102, February.
    44. Atkinson, A B, 1971. "The Distribution of Wealth and the Individual Life-cycle," Oxford Economic Papers, Oxford University Press, vol. 23(2), pages 239-254, July.
    45. Ed Diener & Ed Sandvik & Larry Seidlitz & Marissa Diener, 1993. "The relationship between income and subjective well-being: Relative or absolute?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 28(3), pages 195-223, March.
    46. Foster, James E. & Shneyerov, Artyom A., 2000. "Path Independent Inequality Measures," Journal of Economic Theory, Elsevier, vol. 91(2), pages 199-222, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Paul Gregg & Ricky Kanabar, 2022. "Parental homeownership and education: the implications for offspring wealth inequality in GB," CEPEO Working Paper Series 22-01, UCL Centre for Education Policy and Equalising Opportunities, revised Jul 2023.
    2. Brian Nolan & Juan C. Palomino & Philippe Van Kerm & Salvatore Morelli, 2022. "Intergenerational wealth transfers in Great Britain from the Wealth and Assets Survey in comparative perspective," Fiscal Studies, John Wiley & Sons, vol. 43(2), pages 179-199, June.
    3. Pérez-Mesa, David & Marrero, Gustavo A. & Darias-Curvo, Sara, 2021. "Child health inequality in Sub-Saharan Africa," MPRA Paper 108801, University Library of Munich, Germany.
    4. Marcin Wroński, 2022. "Household wealth in Central and Eastern Europe Explaining the wealth gap between Poland and Hungary," Bank i Kredyt, Narodowy Bank Polski, vol. 53(5), pages 443-474.
    5. Blanchet, Thomas & Martínez-Toledano, Clara, 2023. "Wealth inequality dynamics in europe and the united states: Understanding the determinants," Journal of Monetary Economics, Elsevier, vol. 133(C), pages 25-43.
    6. Kanabar, Ricky & Gregg, Paul, 2022. "Intergenerational wealth transmission and mobility in Great Britain: what components of wealth matter?," ISER Working Paper Series 2022-02, Institute for Social and Economic Research.
    7. Bavaro, Michele & Boscolo, Stefano & Tedeschi, Simone, 2024. "Simulating Long-Run Wealth Distribution and Transmission: The Role of Intergenerational Transfers," INET Oxford Working Papers 2024-01, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    8. Maître, Bertrand & Curristan, Sarah & Russell, Sarah, 2022. "Intergenerational poverty in Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS150, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Juan C. Palomino & Gustavo A. Marrero & Brian Nolan & Juan G. Rodriguez, 2020. "Wealth inequality, intergenerational transfers and socioeconomic background," Working Papers 537, ECINEQ, Society for the Study of Economic Inequality.
    2. Pedro Salas-Rojo & Juan Gabriel Rodríguez, 2022. "Inheritances and wealth inequality: a machine learning approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(1), pages 27-51, March.
    3. Mauricio De Rosa, 2022. "Accumulation, inheritance and wealth distribution: first estimates of the untold half," Documentos de Trabajo (working papers) 22-07, Instituto de Economía - IECON.
    4. Bertrand Garbinti & Frédérique Savignac, 2020. "Accounting for Intergenerational Wealth Mobility in France over the 20th Century: Method and Estimations," Working papers 776, Banque de France.
    5. Pedro Salas-Rojo & Juan Gabriel Rodríguez, 2021. "The distribution of wealth in Spain and the USA: the role of socioeconomic factors," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 12(3), pages 389-421, September.
    6. Elinder, Mikael & Erixson, Oscar & Waldenström, Daniel, 2018. "Inheritance and wealth inequality: Evidence from population registers," Journal of Public Economics, Elsevier, vol. 165(C), pages 17-30.
    7. Leopoldo Cabrera & Gustavo A. Marrero & Juan Gabriel Rodríguez & Pedro Salas-Rojo, 2021. "Inequality of Opportunity in Spain: New Insights from New Data," Hacienda Pública Española / Review of Public Economics, IEF, vol. 237(2), pages 153-185, June.
    8. Paolo Acciari & Salvatore Morelli, 2020. "Wealth Transfers and Net Wealth at Death: Evidence from the Italian Inheritance Tax Records 1995–2016," NBER Chapters, in: Measuring Distribution and Mobility of Income and Wealth, pages 175-203, National Bureau of Economic Research, Inc.
    9. Pedro Salas-Rojo & Juan Gabriel Rodríguez, 2019. "The distribution of wealth in the U.S. and Spain: the role of socio-economic factors," Working Papers 506, ECINEQ, Society for the Study of Economic Inequality.
    10. Marrero,Gustavo Alberto & Rodríguez,Juan Gabriel & Van Der Weide,Roy, 2021. "Does Race and Gender Inequality Impact Income Growth ?," Policy Research Working Paper Series 9865, The World Bank.
    11. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2021. "Accounting for Wealth-Inequality Dynamics: Methods, Estimates, and Simulations for France," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 620-663.
    12. Salvatore Morelli, 2020. "The Dynamics of Wealth Concentration: Thoughts on Tony Atkinson’s Contributions," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 6(1), pages 197-205, March.
    13. Caballé, Jordi & Moro-Egido, Ana I., 2021. "Do aspirations reduce differences in wealth accumulation?," Economic Modelling, Elsevier, vol. 102(C).
    14. Waldenstrom, Daniel & Bastani, Spencer, 2018. "How Should Capital Be Taxed? Theory and Evidence from Sweden," CEPR Discussion Papers 12880, C.E.P.R. Discussion Papers.
    15. Gabriel Zucman, 2019. "Global Wealth Inequality," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 109-138, August.
    16. Kreiner, Claus Thustrup & Olufsen, Isabel Skak, 2022. "Is inequality in subjective well-being meritocratic? Danish evidence from linked survey and administrative data," Journal of Economic Behavior & Organization, Elsevier, vol. 203(C), pages 336-367.
    17. Sandra E. Black & Paul J. Devereux & Fanny Landaud & Kjell G. Salvanes, 2022. "The (Un)Importance of Inheritance," CESifo Working Paper Series 9566, CESifo.
    18. Frémeaux, Nicolas & Leturcq, Marion, 2020. "Inequalities and the individualization of wealth," Journal of Public Economics, Elsevier, vol. 184(C).
    19. John E. Roemer & Alain Trannoy, 2016. "Equality of Opportunity: Theory and Measurement," Journal of Economic Literature, American Economic Association, vol. 54(4), pages 1288-1332, December.
    20. Stefan Humer & Mathias Moser & Matthias Schnetzer, 2017. "Inheritances and the Accumulation of Wealth in the Eurozone," ICAE Working Papers 73, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:oxecpp:v:74:y:2022:i:3:p:643-670.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/oep .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.