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. E. Black , Sandra & Devereux, Paul & Lundborg, Petter & Majlesi, Kaveh, 2015. "Poor Little Rich Kids? The Determinants of the Intergenerational Transmission of Wealth," Knut Wicksell Working Paper Series 2015/6, Lund University, Knut Wicksell Centre for Financial Studies.
    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, 2014. "What Do We Know About Evolution of Top Wealth Shares in the United States?," NBER Working Papers 20734, National Bureau of Economic Research, Inc.
    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. Carneiro, Pedro & Lopez Garcia, Italo & Salvanes, Kjell G. & Tominey, Emma, 2015. "Intergenerational Mobility and the Timing of Parental Income," IZA Discussion Papers 9479, Institute of Labor Economics (IZA).
    16. Sandra E. Black & Paul J. Devereux & Petter Lundborg & Kaveh Majlesi, 2015. "Poor Little Rich Kids? The Role of Nature versus Nurture in Wealth and Other Economic Outcomes and Behaviors," NBER Working Papers 21409, National Bureau of Economic Research, Inc.
    17. 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, Elsevier.
    18. Andreas Fagereng & Magne Mogstad & Marte Rønning, 2015. "Why do wealthy parents have wealthy children?," Discussion Papers 813, Statistics Norway, Research Department.
    19. 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.
    20. 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.
    21. 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.
    22. 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.
    23. 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. 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. Carsten Andersen, 2019. "Intergenerational Health Mobility: Evidence from Danish Registers," Economics Working Papers 2019-04, Department of Economics and Business Economics, Aarhus University.
    3. Annette Alstadsæter & Niels Johannesen & Gabriel Zucman, 2017. "Tax Evasion and Inequality," NBER Working Papers 23772, National Bureau of Economic Research, Inc.
    4. Bastani, Spencer & Waldenström, Daniel, 2019. "Salience of Inherited Wealth and the Support for Inheritance Taxation," Working Paper Series 1260, Research Institute of Industrial Economics.
    5. Bastani, Spencer & Waldenström, Daniel, 2019. "Salience of Inherited Wealth and the Support for Inheritance Taxation," CEPR Discussion Papers 13484, C.E.P.R. Discussion Papers.
    6. 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.
    7. Spencer Bastani & Daniel Waldenström, 2019. "Salience of Inherited Wealth and the Support for Inheritance Taxation," CESifo Working Paper Series 7482, CESifo Group Munich.
    8. repec:aea:aecrev:v:109:y:2019:i:6:p:2073-2103 is not listed on IDEAS

    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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.