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Intergenerational transfers and wealth in the Euro-area: The relevance of inheritances and gifts in absolute and relative terms

Listed author(s):
  • Tiefensee, Anita
  • Westermeier, Christian

Private wealth is a crucial factor for the economic well-being of households. Key determinants of private wealth include intergenerational wealth transfers (gifts and inheritances), which are gaining importance since 1990, as research suggests. We conduct a detailed investigation of the distribution of wealth transfers in eight Euro-area countries. First, we investigate the patterns of prevalence and level of past wealth transfers in the individual countries: Who received transfers, and what is their present value in absolute terms? We find that in most countries the percentages of households with a transfer as well as the mean present value of those transfers is increasing along the distribution of net wealth. Using a series of country-specific multivariate regressions, we find that households with higher income and education levels have both a higher probability of receiving transfers and higher absolute transfer value. We then analyze the present value of transfers as a percent of current net worth. Here, in relative terms, some of the results are reversed, as the relative importance of intergenerational transfers does not increase with the level of wealth or income. Using a fractional logit regression we conclude that for higher income quintiles the share of current net worth due to past intergenerational transfers tends to be decreasing.

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Paper provided by Free University Berlin, School of Business & Economics in its series Discussion Papers with number 2016/4.

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Date of creation: 2016
Handle: RePEc:zbw:fubsbe:20164
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  1. Edward Wolff & Maury Gittleman, 2014. "Inheritances and the distribution of wealth or whatever happened to the great inheritance boom?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 12(4), pages 439-468, December.
  2. Modigliani, Franco, 1988. "The Role of Intergenerational Transfers and Life Cycle Saving in the Accumulation of Wealth," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 15-40, Spring.
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  10. repec:cep:sticas:/146 is not listed on IDEAS
  11. L. Arrondel & M. Roger & F. Savignac, 2014. "Wealth and Income in the Euro Area: Heterogeneity in Households’ Behaviours?," Working papers 497, Banque de France.
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  17. Eleni Karagiannaki, 2011. "Rrecent trends in the size and the distribution of inherited wealth in the UK," CASE Papers case146, Centre for Analysis of Social Exclusion, LSE.
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