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Income Inequality Early in Life: Underage Children as Owners of Privately Held Firms

Author

Listed:
  • Tuuli Paukkeri

    (VATT Institute for Economic Research)

  • Terhi Ravaska

    (Tampere University)

Abstract

We present new evidence that privately held firms are used to transfer income to underage children. This exacerbates wealth and income inequality among children and persists at least into early adulthood. Underage children at the top 1% of the parental income distribution are 20 times more likely to be owners of a privately held firm compared to children in the bottom 90%. The average age of these underage firm owners is 12 years, with ownership occurring across all ages from 0 to 17. Tracking data across generations shows that nearly half of these underage children come from non-entrepreneurial family backgrounds.

Suggested Citation

  • Tuuli Paukkeri & Terhi Ravaska, 2025. "Income Inequality Early in Life: Underage Children as Owners of Privately Held Firms," Working Papers 35, Finnish Centre of Excellence in Tax Systems Research.
    • Handle: RePEc:fit:wpaper:35
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • D3 - Microeconomics - - Distribution
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

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