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Intergenerational Wealth Mobility and the Role of Inheritance: Evidence from Multiple Generations

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  • Adrian Adermon
  • Mikael Lindahl
  • Daniel Waldenström

Abstract

This study estimates intergenerational wealth correlations across up to four generations and examines the degree to which the wealth association between parents and children can be explained by inheritances. Using a Swedish data set with newly hand‐collected data on wealth and bequests, we find parent‐child rank correlations of 0.3–0.4 and grandparent–grandchild rank correlations of 0.1–0.2. Bequests and gifts appear to be central in this process, accounting for at least half of the parent–child wealth correlation while earnings and education can account for only a quarter.

Suggested Citation

  • 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.
  • Handle: RePEc:wly:econjl:v:128:y:2018:i:612:p:f482-f513
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    File URL: https://doi.org/10.1111/ecoj.12535
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    Cited by:

    1. Korom, Philipp, 2016. "Inherited advantage: The importance of inheritance for private wealth accumulation in Europe," MPIfG Discussion Paper 16/11, Max Planck Institute for the Study of Societies.
    2. 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.
    3. Simon Halphen Boserup & Wojciech Kopczuk & Claus Thustrup Kreiner, 2018. "Born with a Silver Spoon? Danish Evidence on Wealth Inequality in Childhood," Economic Journal, Royal Economic Society, vol. 128(612), pages 514-544, July.
    4. Fagereng, Andreas & Guiso, Luigi & Malacrino, Davide & Pistaferri, Luigi, 2016. "Heterogeneity and Persistence in Returns to Wealth," CEPR Discussion Papers 11635, C.E.P.R. Discussion Papers.
    5. Bastani, Spencer & Waldenström, Daniel, 2018. "How Should Capital Be Taxed? Theory and Evidence from Sweden," IZA Discussion Papers 11475, Institute for the Study of Labor (IZA).
    6. He Zhu & Tsunehiro OTSUKI, 2018. "Can Two Consecutive Generations’ Data Predict Longterm Intergenerational Transition? Evidence from China with three generations," OSIPP Discussion Paper 18E004, Osaka School of International Public Policy, Osaka University.
    7. Mathias Moser & Stefan Humer & Matthias Schnetzer, 2016. "Bequests and the accumulation of wealth in the Eurozone," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 149, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.
    8. Bastani, Spencer & Waldenström, Daniel, 2019. "Salience of Inherited Wealth and the Support for Inheritance Taxation," Working Paper Series 1260, Research Institute of Industrial Economics.
    9. repec:bla:revinw:v:65:y:2019:i:1:p:21-47 is not listed on IDEAS
    10. E. Black , Sandra & Devereux, Paul & Lundborg, Petter & Majlesi, Kaveh, 2015. "Poor Little Rich Kids? The Determinants of the Intergenerational Transmission of Wealth," Knut Wicksell Working Paper Series 2015/6, Lund University, Knut Wicksell Centre for Financial Studies.
    11. Andreas Fagereng & Magne Mogstad & Marte Rønning, 2015. "Why do wealthy parents have wealthy children?," Discussion Papers 813, Statistics Norway, Research Department.
    12. Bastani, Spencer & Waldenström, Daniel, 2019. "Salience of Inherited Wealth and the Support for Inheritance Taxation," CEPR Discussion Papers 13484, C.E.P.R. Discussion Papers.
    13. Güell, Maia & Rodríguez Mora, José Vicente & Solon, Gary, 2018. "New Directions in Measuring Intergenerational Mobility," CEPR Discussion Papers 12959, C.E.P.R. Discussion Papers.
    14. Spencer Bastani & Daniel Waldenström, 2019. "Salience of Inherited Wealth and the Support for Inheritance Taxation," CESifo Working Paper Series 7482, CESifo Group Munich.
    15. Crusius, Tobias L. & von Werder, Marten, 2017. "The affluency to quit: How inheritances affect retirement plannings," Discussion Papers 2017/24, Free University Berlin, School of Business & Economics.
    16. 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.
    17. von Werder, Marten, 2018. "Intergenerational transfers: How do they shape the German wealth distribution?," Discussion Papers 2018/15, Free University Berlin, School of Business & Economics.
    18. Hällsten, Martin & Pfeffer, Fabian T., 2017. "Grand advantage: family wealth and grandchildren's educational achievement in Sweden," Working Paper Series 2017:3, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    19. A. Hector Moreno M., 2018. "Good things come in threes: multigenerational transmission of human capital," PSE Working Papers halshs-01945784, HAL.
    20. Jérôme Bourdieu & Lionel Kesztenbaum & Gilles Postel‐Vinay & Akiko Suwa‐Eisenmann, 2019. "Intergenerational Wealth Mobility in France, 19th and 20th Century," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(1), pages 21-47, March.
    21. De Nardi, Mariacristina & Giulio , Fella & Yang, Fang, 2016. "Piketty’s Book and Macro Models of Wealth Inequality," Chicago Fed Letter, Federal Reserve Bank of Chicago.
    22. Kelly Vosters & Jørgen Modalsli, 2019. "Spillover bias in multigenerational income regressions," Discussion Papers 897, Statistics Norway, Research Department.
    23. Jørgen Modalsli, 2016. "Multigenerational persistence. Evidence from 146 years of administrative data," Discussion Papers 850, Statistics Norway, Research Department.
    24. repec:ces:ifodic:v:16:y:2018:i:2:p:50000000002754 is not listed on IDEAS
    25. Adermon, Adrian & Lindahl, Mikael & Palme, Mårten, 2016. "Dynastic human capital, inequality and intergenerational mobility," Working Paper Series 2016:19, IFAU - Institute for Evaluation of Labour Market and Education Policy.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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