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A Flying Start: The Long-Run Effects of Inter Vivos Transfers

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  • Elin Colmsjoe

    (Department of Economics, University of Copenhagen)

Abstract

This study explores how intergenerational inter vivos transfers influence the longrun wealth accumulation of individuals by supporting investments in housing and private business wealth early in the life cycle. A unique Danish policy setting allows me to identify untaxed wealth transfers channeled through housing market entries. Utilizing plausibly exogenous variation in transfer amounts, I find that transfers lead to significant growth in housing wealth, increased business ownership, and higher firm revenues among recipients over the subsequent ten years. The effects are underpinned by greater credit access and lower interest rates stemming from parents’ financial support. Benefits of transfers are more pronounced at younger ages, indicating that their timing in the life cycle matters to lifelong wealth building.

Suggested Citation

  • Elin Colmsjoe, 2024. "A Flying Start: The Long-Run Effects of Inter Vivos Transfers," CEBI working paper series 24-02, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    • Handle: RePEc:kud:kucebi:2402
    as

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    File URL: https://www.econ.ku.dk/cebi/publikationer/working-papers/CEBI_WP_14-24.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Intergenerational transmission; wealth; inter vivos transfers; entrepreneurship; Credit;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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