Intergenerational Transfers in Italy

In this paper we examine the role of intergenerational transfers in the wealth accumulation of Italian households. Received transfers represent an important share of the net wealth held by households. Direct estimates referring to 2002 range from 30 to 55 per cent, depending on the inclusion of the income stream produced by transferred assets. This share has shown a tendency to increase over the last decade. In a lifetime perspective, the ratio of transfers received over the whole life span to the total amount of resources, both computed at the age of 15, is on average equal to 4.6 per cent, a significant share considering the size of the denominator. Transfers are very concentrated, more than income and wealth, even when considered in a lifetime perspective. Households receiving transfers show higher levels of lifetime income, consumption, net wealth and given transfers than non-recipient households. Richer households receive larger transfers but, as a proportion of their current wealth holdings, transfers are greater for poorer households than richer ones. These results cannot be interpreted as an equalising effect of transfers, because people tend to react to transfers, changing their saving and consumption behaviour. The correlation between transfers (received or expected over the whole life span) and lifetime income is positive. Again, richer households receive greater inheritances and other wealth transfers than poorer households; as a proportion of their lifetime income, transfers are greater for poorer households than richer ones. This result is likely to be due to the much more important role played by family background variables than bequests as factors of transmission of inequality of lifetime resources. Finally, we find a positive relationship between left-to-children bequests and received-from-parents inheritances; this relationship holds even after controlling for lifetime resources, suggesting the importance of the role of family traditions.