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Born in the land of milk and honey: The impact of economic growth on individual wealth accumulation

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  • Bartels, Charlotte
  • König, Johannes
  • Schröder, Carsten

Abstract

Economic growth varies substantially across regions and over time. This paper shows that economic growth in a person's birth place is an important determinant for wealth in adulthood. We exploit a new dataset that oversamples wealthy individuals in Germany and includes information on birth district, current residence, individual wealth, gifts and inheritances and parental background. To identify the effect of economic growth on children's wealth we match the population of heirs to statistically equivalent non-heirs. We use regression analysis to determine the effect of regional economic growth on this inherited fraction of wealth. At an average level of GDP at birth, a one standard deviation higher per capita GDP growth at birth increases wealth in adulthood by roughly 130,000 Euro.

Suggested Citation

  • 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.
    • Handle: RePEc:zbw:vfsc21:242398
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    References listed on IDEAS

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    Cited by:

    1. Tayibov, Khayyam, 2024. "Tagging Birthplace for Optimal Tax Policy, Redistribution, and Welfare," Working Papers in Economics and Statistics 9/2024, Linnaeus University, School of Business and Economics, Department of Economics and Statistics.
    2. Boge, Kevin Patrick & Rieth, Malte & Kholodilin, Konstantin, 2024. "The unequal impacts of monetary policies on regional housing markets," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302370, Verein für Socialpolitik / German Economic Association.

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    Keywords

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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