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Houses Divided: A Model of Intergenerational Transfers, Differential Fertility and Wealth Inequality

Author

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  • Aaron Cooke

    (University of Connecticut)

  • Hyun Lee

    (University of Connecticut)

  • Kai Zhao

    (University of Connecticut)

Abstract

Rising income and wealth inequality across the developed world has prompted a renewed focus on the mechanisms driving inequality. This paper contributes to the existing literature by studying the impact from life-cycle savings, intergenerational transfers, and fertility differences between the rich and the poor on wealth distribution. We find that bequests increase the level of wealth inequality and that fertility differences between the rich and the poor amplify this relationship. In addition, we find expected bequests crowd out life-cycle savings and this interaction is quantitatively important for understanding wealth inequality in the United States.

Suggested Citation

  • Aaron Cooke & Hyun Lee & Kai Zhao, 2017. "Houses Divided: A Model of Intergenerational Transfers, Differential Fertility and Wealth Inequality," Working papers 2017-22, University of Connecticut, Department of Economics.
  • Handle: RePEc:uct:uconnp:2017-22
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    References listed on IDEAS

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    Keywords

    Intergenerational transfers; differential fertility; wealth inequality; life-cycle savings.;

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