IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/22549.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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
    Note: CH LS PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w22549.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bernheim, B. Douglas & Lemke, Robert J. & Scholz, John Karl, 2004. "Do estate and gift taxes affect the timing of private transfers?," Journal of Public Economics, Elsevier, vol. 88(12), pages 2617-2634, December.
    2. Björklund, Anders & Roine, Jesper & Waldenström, Daniel, 2012. "Intergenerational top income mobility in Sweden: Capitalist dynasties in the land of equal opportunity?," Journal of Public Economics, Elsevier, vol. 96(5), pages 474-484.
    3. 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.
    4. Simon H. Boserup & Wojciech Kopczuk & Claus T. Kreiner, 2016. "The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records," American Economic Review, American Economic Association, vol. 106(5), pages 656-661, May.
    5. Joulfaian, David, 2005. "Choosing between gifts and bequests: How taxes affect the timing of wealth transfers," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2069-2091, December.
    6. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2007. "From the Cradle to the Labor Market? The Effect of Birth Weight on Adult Outcomes," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 409-439.
    7. Adrian Adermon & Mikael Lindahl & Daniel Waldenström, 2018. "Intergenerational Wealth Mobility and the Role of Inheritance: Evidence from Multiple Generations," Economic Journal, Royal Economic Society, vol. 128(612), pages 482-513, July.
    8. Elinder, Mikael & Erixson, Oscar & Waldenström, Daniel, 2018. "Inheritance and wealth inequality: Evidence from population registers," Journal of Public Economics, Elsevier, vol. 165(C), pages 17-30.
    9. Sandra E Black & Paul J Devereux & Petter Lundborg & Kaveh Majlesi, 2020. "Poor Little Rich Kids? The Role of Nature versus Nurture in Wealth and Other Economic Outcomes and Behaviours," Review of Economic Studies, Oxford University Press, vol. 87(4), pages 1683-1725.
    10. Emmanuel Saez, 2010. "Do Taxpayers Bunch at Kink Points?," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 180-212, August.
    11. Kerwin Kofi Charles & Erik Hurst, 2003. "The Correlation of Wealth across Generations," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1155-1182, December.
    12. Wojciech Kopczuk, 2015. "What Do We Know about the Evolution of Top Wealth Shares in the United States?," Journal of Economic Perspectives, American Economic Association, vol. 29(1), pages 47-66, Winter.
    13. Gregory Clark & Neil Cummins, 2015. "Intergenerational Wealth Mobility in England, 1858–2012: Surnames and Social Mobility," Economic Journal, Royal Economic Society, vol. 125(582), pages 61-85, February.
    14. Wojciech Kopczuk, 2012. "Taxation of Intergenerational Transfers and Wealth," NBER Working Papers 18584, National Bureau of Economic Research, Inc.
    15. Pedro Carneiro & Italo López García & Kjell G. Salvanes & Emma Tominey, 2021. "Intergenerational Mobility and the Timing of Parental Income," Journal of Political Economy, University of Chicago Press, vol. 129(3), pages 757-788.
    16. Gary Solon, 2018. "What Do We Know So Far about Multigenerational Mobility?," Economic Journal, Royal Economic Society, vol. 128(612), pages 340-352, July.
    17. Raj Chetty, 2012. "Bounds on Elasticities With Optimization Frictions: A Synthesis of Micro and Macro Evidence on Labor Supply," Econometrica, Econometric Society, vol. 80(3), pages 969-1018, May.
    18. Arrondel, Luc & Masson, Andre, 2006. "Altruism, exchange or indirect reciprocity: what do the data on family transfers show?," Handbook on the Economics of Giving, Reciprocity and Altruism, in: S. Kolm & Jean Mercier Ythier (ed.), Handbook of the Economics of Giving, Altruism and Reciprocity, edition 1, volume 1, chapter 14, pages 971-1053, Elsevier.
    19. Wolff, Francois-Charles & Laferrere, Anne, 2006. "Microeconomic models of family transfers," Handbook on the Economics of Giving, Reciprocity and Altruism, in: S. Kolm & Jean Mercier Ythier (ed.), Handbook of the Economics of Giving, Altruism and Reciprocity, edition 1, volume 1, chapter 13, pages 889-969, Elsevier.
    20. Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez, 2014. "Where is the land of Opportunity? The Geography of Intergenerational Mobility in the United States," The Quarterly Journal of Economics, Oxford University Press, vol. 129(4), pages 1553-1623.
    21. Sandra E Black & Paul J Devereux & Petter Lundborg & Kaveh Majlesi, 2020. "Poor Little Rich Kids? The Role of Nature versus Nurture in Wealth and Other Economic Outcomes and Behaviours," Review of Economic Studies, Oxford University Press, vol. 87(4), pages 1683-1725.
    22. Henrik Jacobsen Kleven & Martin B. Knudsen & Claus Thustrup Kreiner & Søren Pedersen & Emmanuel Saez, 2011. "Unwilling or Unable to Cheat? Evidence From a Tax Audit Experiment in Denmark," Econometrica, Econometric Society, vol. 79(3), pages 651-692, May.
    23. Andreas Fagereng & Magne Mogstad & Marte Rønning, 2021. "Why Do Wealthy Parents Have Wealthy Children?," Journal of Political Economy, University of Chicago Press, vol. 129(3), pages 703-756.
    24. Emmanuel Saez & Gabriel Zucman, 2016. "Editor's Choice Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, Oxford University Press, vol. 131(2), pages 519-578.
    25. Søren Leth-Petersen, 2010. "Intertemporal Consumption and Credit Constraints: Does Total Expenditure Respond to an Exogenous Shock to Credit?," American Economic Review, American Economic Association, vol. 100(3), pages 1080-1103, June.
    26. repec:ucn:wpaper:10197/317 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Paul Gregg & Ricky Kanabar, 2022. "Parental homeownership and education: the implications for offspring wealth inequality in GB," CEPEO Working Paper Series 22-01, UCL Centre for Education Policy and Equalising Opportunities, revised Jul 2023.
    2. Bastani, Spencer & Waldenström, Daniel, 2018. "How Should Capital Be Taxed? Theory and Evidence from Sweden," IZA Discussion Papers 11475, Institute of Labor Economics (IZA).
    3. 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.
    4. Spencer Bastani & Daniel Waldenström, 2019. "Salience of Inherited Wealth and the Support for Inheritance Taxation," World Inequality Lab Working Papers hal-02877003, HAL.
    5. 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.
    6. Bingley, Paul & Cappellari, Lorenzo & Tatsiramos, Konstantinos, 2023. "On the Origins of Socio-Economic Inequalities: Evidence from Twin Families," IZA Discussion Papers 16520, Institute of Labor Economics (IZA).
    7. Kanabar, Ricky & Gregg, Paul, 2021. "Intergenerational wealth transmission in Great Britain," ISER Working Paper Series 2021-04, Institute for Social and Economic Research.
    8. Peter Siminski & Sin Hung (Timothy) Yu, 2022. "The Correlation of Wealth Between Parents and Children in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(2), pages 195-214, June.
    9. Bee Boileau & David Sturrock, 2023. "Who gives and receives substantial financial transfers in Britain?," IFS Working Papers W23/08, Institute for Fiscal Studies.
    10. Spencer Bastani & Daniel Waldenström, 2020. "How Should Capital Be Taxed?," Journal of Economic Surveys, Wiley Blackwell, vol. 34(4), pages 812-846, September.
    11. Spencer Bastani & Daniel Waldenström, 2018. "How should capital be taxed? The Swedish experience," World Inequality Lab Working Papers hal-02878153, HAL.
    12. Güell, Maia & Rodríguez Mora, José V & Solon, Gary, 2018. "New Directions in Measuring Intergenerational Mobility," CEPR Discussion Papers 12959, C.E.P.R. Discussion Papers.
    13. Nicolas Frémeaux & Marion Leturcq, 2022. "Wealth Accumulation and the Gender Wealth Gap Across Couples’ Legal Statuses and Matrimonial Property Regimes in France," European Journal of Population, Springer;European Association for Population Studies, vol. 38(4), pages 643-679, October.
    14. Kristoffer Berg & Shafik Hebous, 2021. "Does A Wealth Tax Improve Equality of Opportunity?," CESifo Working Paper Series 9174, CESifo.
    15. Annette Alstadsæter & Niels Johannesen & Gabriel Zucman, 2019. "Tax Evasion and Inequality," American Economic Review, American Economic Association, vol. 109(6), pages 2073-2103, June.
    16. Kanabar, Ricky & Gregg, Paul, 2022. "Intergenerational wealth transmission and mobility in Great Britain: what components of wealth matter?," ISER Working Paper Series 2022-02, Institute for Social and Economic Research.
    17. Carsten Andersen, 2019. "Intergenerational Health Mobility: Evidence from Danish Registers," Economics Working Papers 2019-04, Department of Economics and Business Economics, Aarhus University.
    18. Kudła Janusz & Woźniak Rafał & Walczyk Konrad & Dudek Maciej & Kruszewski Robert, 2023. "Determinants of inheritance and gifts taxation in the European Union," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 59(3), pages 225-242, September.
    19. Bartels, Charlotte & König, Johannes & Schröder, Carsten, 2021. "Born in the land of milk and honey: The impact of economic growth on individual wealth accumulation," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242398, Verein für Socialpolitik / German Economic Association.
    20. Spencer Bastani & Daniel Waldenström, 2021. "Perceptions of Inherited Wealth and the Support for Inheritance Taxation," Economica, London School of Economics and Political Science, vol. 88(350), pages 532-569, April.
    21. Su Jin Kang & Wonseok Seo, 2022. "Do People Determine Their Subjective Socioeconomic Status Based on the Housing Type and Residential Neighborhood? Empirical Evidence from Seoul," Land, MDPI, vol. 11(11), pages 1-22, November.
    22. Elin Halvorsen & Thor O. Thoresen, 2021. "Distributional Effects of a Wealth Tax under Lifetime‐Dynastic Income Concepts," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(1), pages 184-215, January.
    23. Camarero Garcia, Sebastian, 2022. "Inequality of Educational Opportunities and the Role of Learning Intensity," Labour Economics, Elsevier, vol. 74(C).
    24. Carsten Andersen, 2021. "Intergenerational health mobility: Evidence from Danish registers," Health Economics, John Wiley & Sons, Ltd., vol. 30(12), pages 3186-3202, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Adrian Adermon & Mikael Lindahl & Daniel Waldenström, 2018. "Intergenerational Wealth Mobility and the Role of Inheritance: Evidence from Multiple Generations," Economic Journal, Royal Economic Society, vol. 128(612), pages 482-513, July.
    2. Bertrand Garbinti & Frédérique Savignac, 2020. "Accounting for Intergenerational Wealth Mobility in France over the 20th Century: Method and Estimations," Working papers 776, Banque de France.
    3. Spencer Bastani & Daniel Waldenström, 2020. "How Should Capital Be Taxed?," Journal of Economic Surveys, Wiley Blackwell, vol. 34(4), pages 812-846, September.
    4. Ricky Kanabar & Paul Gregg, 2021. "Intergenerational wealth transmission in Great Britain," CEPEO Working Paper Series 21-06, UCL Centre for Education Policy and Equalising Opportunities, revised Apr 2021.
    5. Sandra E. Black & Paul J. Devereux & Fanny Landaud & Kjell G. Salvanes, 2022. "The (Un)Importance of Inheritance," CESifo Working Paper Series 9566, CESifo.
    6. Andreas Fagereng & Luigi Guiso & Davide Malacrino & Luigi Pistaferri, 2020. "Heterogeneity and Persistence in Returns to Wealth," Econometrica, Econometric Society, vol. 88(1), pages 115-170, January.
    7. Elinder, Mikael & Erixson, Oscar & Waldenström, Daniel, 2018. "Inheritance and wealth inequality: Evidence from population registers," Journal of Public Economics, Elsevier, vol. 165(C), pages 17-30.
    8. Waldenstrom, Daniel & Bastani, Spencer, 2018. "How Should Capital Be Taxed? Theory and Evidence from Sweden," CEPR Discussion Papers 12880, C.E.P.R. Discussion Papers.
    9. Catherine Guirkinger & Gani Aldashev & Alisher Aldashev & Mate Fodor, 2022. "Economic Persistence Despite Adverse Policies: Evidence from Kyrgyzstan," The Economic Journal, Royal Economic Society, vol. 132(641), pages 258-272.
    10. N. Meltem Daysal & Michael F. Lovenheim & David N. Wasser, 2023. "The Intergenerational Transmission of Housing Wealth," CESifo Working Paper Series 10647, CESifo.
    11. 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.
    12. von Werder, Marten, 2018. "Intergenerational transfers: How do they shape the German wealth distribution?," Discussion Papers 2018/15, Free University Berlin, School of Business & Economics.
    13. Jo Blanden & Andrew Eyles & Stephen Machin, 2023. "Intergenerational home ownership," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(2), pages 251-275, June.
    14. Spencer Bastani & Daniel Waldenström, 2018. "How should capital be taxed? The Swedish experience," Working Papers hal-02878153, HAL.
    15. Philipp Ager & Leah Boustan & Katherine Eriksson, 2021. "The Intergenerational Effects of a Large Wealth Shock: White Southerners after the Civil War," American Economic Review, American Economic Association, vol. 111(11), pages 3767-3794, November.
    16. Jo Blanden & Andrew Eyles & Stephen Machin, 2021. "Trends in Intergenerational Home Ownership and Wealth Transmission," CEPEO Working Paper Series 21-05, UCL Centre for Education Policy and Equalising Opportunities, revised May 2021.
    17. Bertrand Garbinti & Frédérique Savignac, 2020. "Intergenerational Home Ownership in France over the Twentieth Century," NBER Chapters, in: Measuring Distribution and Mobility of Income and Wealth, pages 411-435, National Bureau of Economic Research, Inc.
    18. Kreiner, Claus Thustrup & Olufsen, Isabel Skak, 2022. "Is inequality in subjective well-being meritocratic? Danish evidence from linked survey and administrative data," Journal of Economic Behavior & Organization, Elsevier, vol. 203(C), pages 336-367.
    19. Goupille-Lebret, Jonathan & Infante, Jose, 2018. "Behavioral responses to inheritance tax: Evidence from notches in France," Journal of Public Economics, Elsevier, vol. 168(C), pages 21-34.
    20. Peter Levell & David Sturrock, 2023. "Using Understanding Society to study intergenerational wealth mobility in the UK," Fiscal Studies, John Wiley & Sons, vol. 44(4), pages 417-432, December.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:22549. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.