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Wealth and Inheritance in Britain from 1896 to the Present

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  • A.B. Atkinson

Abstract

There has been a large rise in the UK ratio of personal wealth to national income. Personal wealth has grown since the 1970s about twice as fast in real terms as national income. Has this rise in the wealth-income ratio led to a corresponding increase in the wealth being passed on from one generation to the next? Are we returning to the levels of inheritance found in the 19th century? In France, the research of Thomas Piketty has highlighted the return of inheritance. The aim of this paper is to construct comparable UK evidence on the extent of the transmission of wealth in the form of estates and, insofar as it is possible, gifts inter vivos. It takes a long-run view of inheritance, starting from 1896, when the modern Estate Duty was introduced and exploits the extensive estate data published over the years in the UK. Construction of a long-run time series for more than a century is challenging, and there are important limitations to the resulting estimates which are discussed extensively in the paper. The resulting time-series demonstrates the major importance of inheritance in the UK before the First World War, when the total transmitted wealth represented some 20 per cent when expressed relative to net national income. In the inter-war period, the total was around 15 per cent, falling to some 10 per cent after the Second World War, and then falling further to below 5 per cent in the late 1970s. Since then, there has indeed been an upturn, although less marked than in France: a rise from 4.8 per cent in 1977 to 8.2 per cent in 2006. This increase was more or less in line with the increase in personal wealth, and has to be interpreted in the light of the changing net worth of the corporate and public sectors of the economy.

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  • A.B. Atkinson, 2013. "Wealth and Inheritance in Britain from 1896 to the Present," CASE Papers case178, Centre for Analysis of Social Exclusion, LSE.
  • Handle: RePEc:cep:sticas:case178
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    2. 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.
    3. Piketty, Thomas & Zucman, Gabriel, 2014. "Wealth and Inheritance in the Long Run," CEPR Discussion Papers 10072, C.E.P.R. Discussion Papers.
    4. Jorge Rojas-Vallejos & Stephen J. Turnovsky, 2021. "Differential Tariffs and Income Inequality in the United States: Some Evidence from the States," Open Economies Review, Springer, vol. 32(1), pages 1-35, February.
    5. 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.
    6. Li, Qinghai & Li, Shi & Wan, Haiyuan, 2020. "Top incomes in China: Data collection and the impact on income inequality," China Economic Review, Elsevier, vol. 62(C).
    7. Shi Li & Haiyuan Wan & Qinghai Li, 2018. "Top incomes in China: Data collection and the impact on income inequality," WIDER Working Paper Series 183, World Institute for Development Economic Research (UNU-WIDER).
    8. Kapeller, Jakob & Leitch, Stuart & Wildauer, Rafael, 2021. "A European wealth tax for a fair and green recovery," Greenwich Papers in Political Economy 31442, University of Greenwich, Greenwich Political Economy Research Centre.
    9. 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, National Bureau of Economic Research, Inc.
    10. Abraham, Martin & Lorek, Kerstin & Richter, Friedemann & Wrede, Matthias, 2018. "Breaking the norms: When is evading inheritance taxes socially acceptable?," European Journal of Political Economy, Elsevier, vol. 52(C), pages 85-102.
    11. Karagiannaki, Eleni, 2015. "Recent trends in the size and the distribution of inherited wealth in the UK," LSE Research Online Documents on Economics 59949, London School of Economics and Political Science, LSE Library.
    12. Samuel Forbes & Stefan Grosskinsky, 2021. "A Study of UK Household Wealth through Empirical Analysis and a Non-linear Kesten Process," Papers 2107.02169, arXiv.org.
    13. Abraham, Martin & Lorek, Kerstin & Richter, Friedemann & Wrede, Matthias, 2014. "Strictness of tax compliance norms: A factorial survey on the acceptance of inheritance tax evasion in Germany," FAU Discussion Papers in Economics 07/2014, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    14. Rafael Wildauer & Stuart Leitch & Jakob Kapeller, 2021. "A European Wealth Tax for a Fair and Green Recovery," ICAE Working Papers 129, Johannes Kepler University, Institute for Comprehensive Analysis of the Economy.
    15. 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.
    16. 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.

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    More about this item

    Keywords

    wealth; inheritance; estate data;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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