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Intergenerational wealth mobility and the role of inheritance: Evidence from multiple generations

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  • Adermon, Adrian
  • Lindahl, Mikael
  • Waldenström, Daniel

Abstract

This study estimates intergenerational correlations in mid-life wealth across three generations, and a young fourth generation, and examines how much of the parent-child association that can be explained by inheritances. Using a Swedish data set we find parent-child rank correlations of 0.3-0.4 and grandparents-grandchild rank correlations of 0.1-0.2. Conditional on parents' wealth, grandparents' wealth is weakly positively associated with grandchild's wealth and the parent-child correlation is basically unchanged if we control for grandparents' wealth. Bequests and gifts strikingly account for at least 50 per cent of the parent-child wealth correlation while earnings and education are only able to explain 25 per cent.

Suggested Citation

  • Adermon, Adrian & Lindahl, Mikael & Waldenström, Daniel, 2016. "Intergenerational wealth mobility and the role of inheritance: Evidence from multiple generations," CEPR Discussion Papers 11456, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11456
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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, 2015. "Inheritance and wealth inequality: Evidence from population registers," Working Paper Series, Center for Fiscal Studies 2015:3, Uppsala University, Department of Economics.
    3. Boserup, Simon H. & Kopczuk, Wojciech & Kreiner, Claus T., 2016. "Born with a silver spoon? Danish evidence on wealth inequality in childhood," CEPR Discussion Papers 11490, C.E.P.R. Discussion Papers.
    4. 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.
    5. 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.
    6. 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).
    7. 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.
    8. 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.
    9. Andreas Fagereng & Magne Mogstad & Marte Rønning, 2015. "Why do wealthy parents have wealthy children?," Discussion Papers 813, Statistics Norway, Research Department.
    10. Jørgen Modalsli, 2016. "Multigenerational persistence. Evidence from 146 years of administrative data," Discussion Papers 850, Statistics Norway, Research Department.
    11. Black, Sandra E. & Devereux, Paul J. & Lundborg, Petter & Majlesi, Kaveh, 2015. "Poor Little Rich Kids? The Determinants of the Intergenerational Transmission of Wealth," IZA Discussion Papers 9227, Institute for the Study of Labor (IZA).
    12. 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.
    13. 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.
    14. 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.
    15. 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.
    16. Jérôme Bourdieu & Lionel Kesztenbaum & Gilles Postel-Vinay & Akiko Suwa-Eisenmann, 2014. "Intergenerational Wealth Mobility in France, 19th and 20th Century," Post-Print halshs-01626848, HAL.

    More about this item

    Keywords

    Income mobility; inequality; Inheritance;

    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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