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

Brian Nolan, Juan C. Palomino, Philippe Van Kerm, Salvatore Morelli

Research output: Contribution to journalArticlepeer-review

Abstract

The role of intergenerational transfers of wealth via inheritance and gifts inter vivos in the accumulation of household wealth and the generation of wealth inequality has been hotly debated. This paper uses data from household wealth surveys for six rich countries – Britain, France, Germany, Italy, Spain and the US – to assess the contribution of intergenerational wealth transfers to wealth inequality using decomposition methods for the Gini coefficient. The results show that transfer wealth is consistently a good deal more unequally distributed than non-transfer wealth and total wealth. Transfer wealth accounts for only about one-tenth of overall wealth inequality for the US compared to one-third for Germany and Italy. This mirrors the importance of transfer wealth in total wealth in each country, with differences in inequality in transfer wealth and its correlation with total wealth having only a modest impact. We find that a marginal percentage increase in all transfers reduces total wealth inequality in Britain, Germany and the US, while it would increase total wealth inequality in France, Italy and Spain.
Original languageEnglish
Article number109701
JournalEconomics Letters
Volume199
DOIs
Publication statusPublished - Feb 2021

Keywords

  • Wealth
  • Inheritance
  • Intergenerational transmission

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