The impact of inheritance on the distribution of wealth: evidence from Great Britain

Eleni Karagiannaki

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Using the British Household Panel Survey, we investigate the role of inheritance in shaping the distribution of household wealth in Great Britain during 1995-2005 – a period characterised by a substantial increase in wealth and an equally important decrease in wealth inequality. Abstracting from behavioural effects, we find that inheritances received during this period accounted for 30 per cent of the increase in wealth of inheritors. Regression estimates of the effect of inheritance on wealth accumulation suggest that households spend 30 per cent of their inheritances on average, and that there is substantial heterogeneity in household responses. Households that accumulated more wealth saved a larger share of their inheritances, as did middle aged households and those with lower initial wealth. Although inheritances are highly unequal they had a small impact on overall wealth inequality. This mainly reflected the fact that their size relative to other sources of wealth was very small.

Keywords: inheritance; wealth; intergenerational transfers; inequality (search for similar items in EconPapers)
JEL-codes: D10 D31 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2017-06-01
New Economics Papers: this item is included in nep-eur
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Citations: View citations in EconPapers (18)

Published in Review of Income and Wealth, 1, June, 2017, 63(2), pp. 394 - 408. ISSN: 0034-6586

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:62622

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