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Inherited Wealth and Demographic Aging

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  • Pestieau, Pierre
  • Onder, Harun

Abstract

The role of inherited wealth in modern economies has increasingly become under scrutiny. This study presents one of the first attempts to shed light on how demographic aging could shape this role. We show that, in the absence of retirement annuities, or for a given level of annuitization, both increasing longevity and decreasing fertility should reduce the inherited share of total wealth in a given economy. Thus, aging is not likely to explain a recent surge in this share in some advanced economies. Shrinking retirement annuities, however, could oset and potentially reverse these eects. We also show that aging could increase the size of individual bequests vis-Ã -vis real wages. However, these bequests will be more unequally distributed if aging is driven by a drop in fertility. In comparison, the eect of increasing longevity on their distribution in non-monotonic.

Suggested Citation

  • Pestieau, Pierre & Onder, Harun, 2016. "Inherited Wealth and Demographic Aging," CEPR Discussion Papers 11387, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11387
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    1. Harun Onder & Pierre Pestieau, 2016. "Aging and the Inherited Wealth of Nations," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(01), pages 30-36, May.
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    12. repec:hal:pseose:halshs-01109372 is not listed on IDEAS
    13. Harun Onder & Pierre Pestieau, 2016. "Aging and the Inherited Wealth of Nations," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(1), pages 30-36, 05.
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    Cited by:

    1. Betti, Thierry & Lefebvre, Mathieu & Pestieau, Pierre, 2023. "Macroeconomics of aging," LIDAM Discussion Papers CORE 2023002, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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    More about this item

    Keywords

    Bequest motives; Aging; Inherited wealth;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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