The (Un)Importance of Inheritance

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Title: The (Un)Importance of Inheritance
Authors: Black, Sandra E.Devereux, Paul J.Landaud, FannySalvanes, Kjell G.
Permanent link: http://hdl.handle.net/10197/12775
Date: Jan-2022
Online since: 2022-02-28T16:37:04Z
Abstract: Transfers from parents—either in the form of gifts or inheritances—have received much attention as a source of inequality. This paper uses a 19-year panel of administrative data for the population of Norway to examine the share of the Total Inflows available to an individual (defined as the capitalized sum of net labor income, government transfers, and gifts and inheritances received over the period) accounted for by capitalized gifts and inheritances. Perhaps surprisingly, we find that gifts and inheritances represent a small share of Total Inflows; this is true across the distribution of Total Inflows, as well as at all levels of net wealth at a point in time. Gifts and inheritances are only an important source of income flows among those who have very wealthy parents. Additionally, gifts and inheritances have very little effect on the distribution of Total Inflows – when we do a counterfactual Total Inflows distribution with zero gifts and inheritances, it is not much different from the actual distribution. Our findings suggest that inheritance taxes may do little to mitigate the extreme wealth inequality in society.
Funding Details: Research Council of Norway
NORFACE DIAL
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Start page: 1
End page: 46
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP2022/02
Copyright (published version): 2022 the Authors
Keywords: Intergenerational transmissionInheritances and giftsWealth inequality
JEL Codes: G5; J01; J1
Language: en
Status of Item: Not peer reviewed
This item is made available under a Creative Commons License: https://creativecommons.org/licenses/by-nc-nd/3.0/ie/
Appears in Collections:Economics Working Papers & Policy Papers

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