The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records

Using Danish administrative data, we estimate the impact of bequests on the level and inequality of wealth. We compare the distributions of wealth over time of people whose parent died and those whose parent did not. Bequests account for 26 percent of the average post-bequest wealth 1-3 years after...

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Bibliographic Details
Published inThe American economic review Vol. 106; no. 5; pp. 656 - 661
Main Authors Boserup, Simon H., Kopczuk, Wojciech, Kreiner, Claus T.
Format Journal Article
LanguageEnglish
Published Nashville American Economic Association 01.05.2016
Subjects
Analysis
Bequests
Children & youth
Economic theory
Economics
ESTATE TAXATION AND THE INTERGENERATIONAL TRANSMISSION OF WEALTH
Families & family life
Inequality
Parents & parenting
Studies
Wealth
Wealth distribution
Denmark
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Summary:Using Danish administrative data, we estimate the impact of bequests on the level and inequality of wealth. We compare the distributions of wealth over time of people whose parent died and those whose parent did not. Bequests account for 26 percent of the average post-bequest wealth 1-3 years after parental death and significantly affect wealth throughout the distribution. Bequests increase absolute wealth inequality (variance of the distribution censored at the top/bottom 1% increases by 33 percent), but reduce relative inequality (the top 1% share declines by 6 percentage points from the base of 31 percent).
ISSN:0002-8282
1944-7981
DOI:10.1257/aer.p20161036