Intergenerational Wealth Mobility and the Role of Inheritance: Evidence from Multiple Generations

Abstract

This study estimates intergenerational wealth correlations across up to four generations and examines the degree to which the wealth association between parents and children can be explained by inheritances. Using a Swedish data set with newly hand-collected data on wealth and bequests, we find parent-child rank correlations of 0.3-0.4 and grandparent-grandchild rank correlations of 0.1-0.2. Bequests and gifts appear to be central in this process, accounting for at least half of the parentchild wealth correlation while earnings and education can account for only a quarter.

Grand Advantage

“…While some studies argue that the persistence of wealth is limited to two generations (e.g., Adermon, Lindahl, and Waldenström 2015 for Sweden), others have found effects of grandparents’ wealth that extend to their grandchildren’s wealth position (Pfeffer and Killewald 2016a). For intergenerational mobility more broadly, a current strand of the literature suggests that inequality should be studied as transmitted across multiple rather than just two generations (Hällsten 2014; Jaeger 2012; Lindahl, Palme, Massih, and Sjögren 2015; Mare 2011).…”

New Directions in Measuring Intergenerational Mobility: Introduction

“…The article by Solon (2018) summarises both the theoretical and empirical literatures. The article by Adermon et al (2018) reports similar results for intergenerational wealth transmission across three generations from Malm€ o, Sweden. The article by Long and Ferrie (2018) develops and analyses three generations of occupational data from Great Britain and the US over the period.…”

“…(We will say a bit more about such results in Section 2.) The article by Adermon et al (2018) reports similar results for intergenerational wealth transmission across three generations from Malm€ o, Sweden. Continuing on the subject of wealth inequality, the article by Boserup et al (2018) studies wealth inequality among children in Denmark.…”

“…Based on the statistical significance of the estimated grandfather coefficient, Long and Ferrie conclude that 'assessments of mobility based on two-generation estimates significantly overstate the true amount of long-run social mobility'. Similarly, the wealth regressions in Table 3 of the article by Adermon et al (2018) show that adding the grandparental variable moves the unadjusted R 2 from 0.174 to only 0.181. For example, Table 3 shows that adding the grandfather regressor to the model increases the adjusted R 2 from 0.110 to only 0.116.…”

Intergenerational Wealth Mobility in France, 19th and 20th Century

“…Most of these papers use contemporaneous data from Europe and North America and focus on income. Some studies have a longer time span and expand over three generations (Solon, 2014;Pfeffer and Killeward, 2015) or more (Clark and Cummins, 2015;Adermon et al, 2016). A few papers go back to the 19th century (Long and Ferrie, 2013 on occupational mobility in Britain and in the U.S.; Modalsli, 2015 on Norway) and find that mobility is not constant over time, its evolution being related to structural change in the pattern of jobs (out of farming), the spread of public education and migration.…”