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On the long-run evolution of inheritance: France 1820-2050

  • Thomas Piketty

    (PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics)

This paper attempts to document and account for the long run evolution of inheritance. We find that in a country like France the annual flow of inheritance was about 20%-25% of national income between 1820 and 1910, down to less than 5% in 1950, and back up to about 15% by 2010. A simple theoretical model of wealth accumulation, growth and inheritance can fully account for the observed U-shaped pattern and levels. Using this model, we find that under plausible assumptions the annual bequest flow might reach about 20%-25% of national income by 2050. This corresponds to a capitalized bequest share in total wealth accumulation well above 100%. Our findings illustrate the fact that when the growth rate g is small, and when the rate of return to private wealth r is permanently and substantially larger than the growth rate (say, r=4%-5% vs. g=1%-2%), which was the case in the 19th century and early 20th century and is likely to happen again in the 21st century, then past wealth and inheritance are bound to play a key role for aggregate wealth accumulation and the structure of lifetime inequality. Contrarily to a widely spread view, modern economic growth did not kill inheritance.

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Paper provided by HAL in its series PSE Working Papers with number halshs-00564853.

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Date of creation: May 2010
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Handle: RePEc:hal:psewpa:halshs-00564853
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  1. Gokhale, Jagadeesh & Kotlikoff, Laurence J. & Sefton, James & Weale, Martin, 2001. "Simulating the transmission of wealth inequality via bequests," Journal of Public Economics, Elsevier, vol. 79(1), pages 93-128, January.
  2. Wojciech Kopczuk & Emmanuel Saez, 2004. "Top Wealth Shares in the United States: 1916-2000: Evidence from Estate Tax Returns," NBER Working Papers 10399, National Bureau of Economic Research, Inc.
  3. William G. Gale & John Karl Scholz, 1994. "Intergenerational Transfers and the Accumulation of Wealth," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 145-160, Fall.
  4. Piketty, Thomas & Postel-Vinay, Gilles & Rosenthal, Jean Laurent, 2004. "Wealth Concentration in a Developing Economy: Paris and France, 1807-1994," CEPR Discussion Papers 4631, C.E.P.R. Discussion Papers.
  5. Edward Wolff & Ajit Zacharias, 2009. "Household wealth and the measurement of economic well-being in the United States," Journal of Economic Inequality, Springer, vol. 7(2), pages 83-115, June.
  6. Laurent E. Calvet & John Y. Campbell & Paolo Sodini, 2008. "Fight or Flight? Portfolio Rebalancing by Individual Investors," NBER Working Papers 14177, National Bureau of Economic Research, Inc.
  7. Fiaschi, Davide & Marsili, Matteo, 2012. "Distribution of wealth and incomplete markets: Theory and empirical evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 243-267.
  8. Wolff, Edward N, 1989. "Trends in Aggregate Household Wealth in the U.S., 1900-83," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 35(1), pages 1-29, March.
  9. Jesper Roine & Daniel Waldenström, 2009. "Wealth Concentration over the Path of Development: Sweden, 1873-2006," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(1), pages 151-187, 03.
  10. Marco Cagetti & Mariacristina De Nardi, 2006. "Wealth Inequality: Data and Models," NBER Working Papers 12550, National Bureau of Economic Research, Inc.
  11. Luc Arrondel & Anne Laferrère, 1994. "La transmission des grandes fortunes. Profil des riches défunts en France," Économie et Statistique, Programme National Persée, vol. 273(1), pages 41-52.
  12. Wojciech Kopczuk, 2007. "Bequest and Tax Planning: Evidence from Estate Tax Returns," The Quarterly Journal of Economics, Oxford University Press, vol. 122(4), pages 1801-1854.
  13. Makoto Nirei & Wataru Souma, 2007. "A Two Factor Model Of Income Distribution Dynamics," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(3), pages 440-459, 09.
  14. Oded Galor & Omer Moav, 2004. "Das Human Kapital: A Theory of the Demise of the Class Structure," GE, Growth, Math methods 0410003, EconWPA.
  15. Kotlikoff, Laurence J, 1988. "Intergenerational Transfers and Savings," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 41-58, Spring.
  16. repec:oup:restud:v:74:y:2007:i:1:p:207-235 is not listed on IDEAS
  17. Lena Edlund & Wojciech Kopczuk, 2009. "Women, Wealth, and Mobility," American Economic Review, American Economic Association, vol. 99(1), pages 146-78, March.
  18. repec:nsr:niesrd:99 is not listed on IDEAS
  19. Kessler, Denis & Masson, Andre, 1989. "Bequest and Wealth Accumulation: Are Some Pieces of the Puzzle Missing?," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 141-52, Summer.
  20. Wojciech Kopczuk & Joseph P. Lupton, 2004. "To leave or not to leave: the distribution of bequest motives," Finance and Economics Discussion Series 2004-33, Board of Governors of the Federal Reserve System (U.S.).
  21. Céline Antonin, 2009. "Age, revenu et comportements d'épargne des ménages : une analyse théorique et empirique sur la période 1978-2006," Sciences Po publications info:hdl:2441/5l6uh8ogmqi, Sciences Po.
  22. Arrondel, L. & Laferrere, A., 1998. "Taxation and Wealth Transmission in France," DELTA Working Papers 98-13, DELTA (Ecole normale supérieure).
  23. Laurent E. Calvet & John Y. Campbell & Paolo Sodini, 2009. "Fight or Flight? Portfolio Rebalancing by Individual Investors," The Quarterly Journal of Economics, Oxford University Press, vol. 124(1), pages 301-348.
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