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Born in the Land of Milk and Honey: Hometown Growth and Individual Wealth Accumulation

Author

Listed:
  • Charlotte Bartels
  • Johannes König
  • Carsten Schröder

Abstract

How does economic growth affect individual wealth accumulation and, thereby, wealth inequality? Combining individual wealth from the Socio-Economic Panel (SOEP) and local GDP growth across 401 German counties, this paper documents a sizable Hometown-Growth-Wealth Nexus. We find that past variation in hometown growth across cohorts and regions contributes to high wealth inequality today. Individuals exposed to high growth during childhood save more and are more likely to be invested in housing. While this savings channel operates for heirs and non-heirs alike, heirs from the same hometown are richer. We validate the Hometown-Growth-Wealth Nexus and the savings channel for the UK.

Suggested Citation

  • Charlotte Bartels & Johannes König & Carsten Schröder, 2025. "Born in the Land of Milk and Honey: Hometown Growth and Individual Wealth Accumulation," CESifo Working Paper Series 12024, CESifo.
    • Handle: RePEc:ces:ceswps:_12024
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    File URL: https://www.ifo.de/DocDL/cesifo1_wp12024.pdf
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    Keywords

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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