How inheritances shape wealth distributions: An international comparison

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Highlights: Decomposition of net household wealth inequality in the inequality loadings of wealth transfers and net worth without transfers.  The first study of this kind that resorts to the HFCS data which provides comparable data on household wealth for several Euro-countries.  Shows that intergenerational transfers widely equalize relative wealth inequality. Abstract:We use data from the European Household Finance and Consumption Survey in order to examine the distributional effect of intergenerational wealth transfers on the net worth distribution in 8 European countries and compare it to recent findings for the US. To do so, we resort to the decomposition of the coefficient of variation as suggested and applied by Wolff (1987Wolff ( , 2002Wolff ( , 2015 and Wolff and Gittleman (2014). The results hint that inheritances and gifts have a vastly equalizing effect on inequality in household wealth in all 8 countries.

Wealth Inequalities

“…Elinder et al (2018) implement a similar exercise with Swedish wealth registers and find supportive evidence: In Sweden, inheritances reduce relative wealth inequality, as measured by the Gini and top wealth shares, but increase absolute inequality. Bönke et al (2017), decomposing net wealth of European households into components stemming from inheritances and other factors using data from the HFCS for eight countries, confirm that richer households receive larger absolute transfers, but these are smaller relative to their net wealth. These findings line up with the evidence from the SCF.…”

Untitled

“…In this regard, Bönke, Werder and Westermeier (2017) show for a wide range of euro area countries that the coefficient of variation on overall net wealth including inheritances is always smaller than if the capitalized value of inheritances is subtracted from net wealth. The only exception is Luxembourg.…”

“…On the other hand, inheritances redistribute wealth between generations and thus have an inequality-decreasing effect, too. In sum, the latter effect seems to outweigh the first, so that the overall effect of inheritances is inequality-decreasing (see Wolff and Gittleman, 2014;Bönke, Werder and Westermeier, 2017;Beznoska, Niehues and Stockhausen, 2018: 13).…”

Intergenerational wealth transfers and wealth inequality in rich countries: What do we learn from Gini decomposition?

“…The SCF has been running since the early 1980s but the HFCS only began around 2010 and the 1 Fessler and Schürz (2018) use data for thirteen Euro-zone countries but focus on the impact of having received an inheritance on the household's rank in the wealth distribution rather than wealth inequality. Bönke et al (2017) use data from eight Eurozone countries to compare decompositions of the squared coefficient of variation with US results reported in Wolff (2015).…”