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Intergenerational wealth transfers and wealth inequality in rich countries: What do we learn from Gini decomposition?

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  • Nolan, Brian
  • Palomino, Juan C.
  • Van Kerm, Philippe
  • Morelli, Salvatore

Abstract

The role of intergenerational transfers of wealth via inheritance and gifts inter vivos in the accumulation of household wealth and the generation of wealth inequality has been hotly debated. This paper uses data from household wealth surveys for six rich countries – Britain, France, Germany, Italy, Spain and the US – to assess the contribution of intergenerational wealth transfers to wealth inequality using decomposition methods for the Gini coefficient. The results show that transfer wealth is consistently a good deal more unequally distributed than non-transfer wealth and total wealth. Transfer wealth accounts for only about one-tenth of overall wealth inequality for the US compared to one-third for Germany and Italy. This mirrors the importance of transfer wealth in total wealth in each country, with differences in inequality in transfer wealth and its correlation with total wealth having only a modest impact. We find that a marginal percentage increase in all transfers reduces total wealth inequality in Britain, Germany and the US, while it would increase total wealth inequality in France, Italy and Spain.

Suggested Citation

  • Nolan, Brian & Palomino, Juan C. & Van Kerm, Philippe & Morelli, Salvatore, 2021. "Intergenerational wealth transfers and wealth inequality in rich countries: What do we learn from Gini decomposition?," Economics Letters, Elsevier, vol. 199(C).
    • Handle: RePEc:eee:ecolet:v:199:y:2021:i:c:s0165176520304614
    DOI: 10.1016/j.econlet.2020.109701
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    Cited by:

    1. Manuel Schechtl, 2021. "Inheritance Taxation in Comparative Perspective," LWS Working papers 35, LIS Cross-National Data Center in Luxembourg.
    2. Tisch, Daria & Schechtl, Manuel, 2023. "The Gender (Tax) Gap in Parental Transfers. Evidence from Administrative Inheritance and Gift Tax Data," SocArXiv kfetw, Center for Open Science.
    3. Luca Giangregorio & Davide Villani, 2023. "Income inequality, top shares of income and social classes in the 21st century," JRC Working Papers on Social Classes in the Digital Age 2023-05, Joint Research Centre.
    4. Brian Nolan & Juan C. Palomino & Philippe Van Kerm & Salvatore Morelli, 2022. "Intergenerational wealth transfers in Great Britain from the Wealth and Assets Survey in comparative perspective," Fiscal Studies, John Wiley & Sons, vol. 43(2), pages 179-199, June.
    5. Roth, Steve, 2022. "Distributional Haig-Simons Income Accounts for U.S. Households, 2000-2019," MPRA Paper 114524, University Library of Munich, Germany.
    6. Kuypers, Sarah & Figari, Francesco & Verbist, Gerlinde, 2024. "Vertical and horizontal equity of wealth taxes: An assessment from a joint income-wealth perspective," Economics Letters, Elsevier, vol. 234(C).
    7. Katrin Rickmeier, 2023. "Navigating Regional Barriers to Job Mobility: The Role of Opportunity Structures in Individual Job-to-Job Transitions," Social Sciences, MDPI, vol. 12(5), pages 1-25, May.
    8. Dang, Dong Quang & Wu, Weiou & Korkos, Ioannis, 2024. "Stock market and inequality distributions – Evidence from the BRICS and G7 countries," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1172-1190.
    9. Bavaro, Michele & Boscolo, Stefano & Tedeschi, Simone, 2024. "Simulating Long-Run Wealth Distribution and Transmission: The Role of Intergenerational Transfers," INET Oxford Working Papers 2024-01, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    10. Burchardt, Tania & Steele, Fiona & Grundy, Emily & Karagiannaki, Eleni & Kuha, Jouni & Moustaki, Irini & Skinner, Chris & Zhang, Nina & Zhang, Siliang, 2021. "Welfare within families beyond households: intergenerational exchanges of practical and financial support in the UK," LSE Research Online Documents on Economics 111868, London School of Economics and Political Science, LSE Library.
    11. Fasianos, Apostolos & Tsoukalis, Panos, 2023. "Decomposing wealth inequalities in the wake of the Greek debt crisis," The Journal of Economic Asymmetries, Elsevier, vol. 28(C).

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    More about this item

    Keywords

    Wealth; Inheritance; Intergenerational transmission;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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