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Simulating Long-Run Wealth Distribution and Transmission: The Role of Intergenerational Transfers

Author

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  • Bavaro, Michele
  • Boscolo, Stefano
  • Tedeschi, Simone

Abstract

This paper utilises the Italian Treasury Dynamic Microsimulation Model (T-DYMM) to project individual and household economic trends up to 2070, focusing on the intergenerational transmission of wealth inequality. To analyse the impact of intergenerational transfers (IGTs) on wealth inequality, various scenarios are compared to a baseline. Results suggest that net wealth inequality will remain stable until 2040, when it is expected to rise progressively, especially due to the rising role of IGTs. Demographic factors like increased life expectancy and declining fertility are the main explanations for this phenomenon. Finally, while some assumptions, like accounting for no behavioural adjustments in response to tax changes, have limitations, this study provides valuable insights into potential effects and timelines for inheritance tax reforms on long-term inequality transmission.

Suggested Citation

  • 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.
    • Handle: RePEc:amz:wpaper:2024-01
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    More about this item

    Keywords

    intergenerational transfers; inheritance; taxation; wealth inequality; capital income; dynamic microsimulation.;
    All these keywords.

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