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Born with a Silver Spoon? Danish Evidence on Wealth Inequality in Childhood

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  • Simon Halphen Boserup
  • Wojciech Kopczuk
  • Claus Thustrup Kreiner

Abstract

We study wealth inequality in childhood using Danish wealth records from three decades. While teenagers have some earnings, we estimate that transfers account for at least 50 percent of wealth at age 18, and much more so for the rich children. Inheritance from grandparents does not appear quantitatively important, but we do find evidence that children receive inter vivos transfers. While wealth holdings are small in childhood, they have strong predictive power for future wealth in adulthood. Asset holdings at age 18 are more informative than parental wealth in predicting wealth of children many years later when they are in their 40s. Hence, childhood wealth reveals significant heterogeneity in the intergenerational transmission of wealth, which is not simply captured by parental wealth alone. We investigate why this is the case and rule out that childhood wealth in itself can accumulate enough to explain later wealth inequality. Our evidence indicates that childhood wealth is a proxy for a broad set of circumstances related to intergenerational transmission and future wealth accumulation, including savings/investment behavior and additional transfers.

Suggested Citation

  • Simon Halphen Boserup & Wojciech Kopczuk & Claus Thustrup Kreiner, 2016. "Born with a Silver Spoon? Danish Evidence on Wealth Inequality in Childhood," NBER Working Papers 22549, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:22549
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    Cited by:

    1. Bastani, Spencer & Waldenström, Daniel, 2018. "How Should Capital Be Taxed? Theory and Evidence from Sweden," IZA Discussion Papers 11475, Institute of Labor Economics (IZA).
    2. Sander Wagner & Diederik Boertien & Mette Gørtz, 2020. "The Wealth of Parents: Trends Over Time in Assortative Mating Based on Parental Wealth," Demography, Springer;Population Association of America (PAA), vol. 57(5), pages 1809-1831, October.
    3. Spencer Bastani & Daniel Waldenström, 2019. "Salience of Inherited Wealth and the Support for Inheritance Taxation," World Inequality Lab Working Papers hal-02877003, HAL.
    4. Thomas Epper & Ernst Fehr & Helga Fehr-Duda & Claus Thustrup Kreiner & David Dreyer Lassen & Søren Leth-Petersen & Gregers Nytoft Rasmussen, 2020. "Time Discounting and Wealth Inequality," American Economic Review, American Economic Association, vol. 110(4), pages 1177-1205, April.
    5. Gregg, Paul & Kanabar, Ricky, 2021. "Intergenerational wealth transmission in Great Britain," ISER Working Paper Series 2021-04, Institute for Social and Economic Research.
    6. Spencer Bastani & Daniel Waldenström, 2020. "How Should Capital Be Taxed?," Journal of Economic Surveys, Wiley Blackwell, vol. 34(4), pages 812-846, September.
    7. Spencer Bastani & Daniel Waldenström, 2018. "How should capital be taxed? The Swedish experience," World Inequality Lab Working Papers hal-02878153, HAL.
    8. Güell, Maia & Rodríguez Mora, José Vicente & Solon, Gary, 2018. "New Directions in Measuring Intergenerational Mobility," CEPR Discussion Papers 12959, C.E.P.R. Discussion Papers.
    9. Annette Alstadsæter & Niels Johannesen & Gabriel Zucman, 2019. "Tax Evasion and Inequality," American Economic Review, American Economic Association, vol. 109(6), pages 2073-2103, June.
    10. Kristoffer Berg & Shafik Hebous, 2021. "Does A Wealth Tax Improve Equality of Opportunity?," CESifo Working Paper Series 9174, CESifo.
    11. Carsten Andersen, 2019. "Intergenerational Health Mobility: Evidence from Danish Registers," Economics Working Papers 2019-04, Department of Economics and Business Economics, Aarhus University.

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    More about this item

    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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