Poor Little Rich Kids? The Determinants of the Intergenerational Transmission of Wealth

Sandra Black, Paul Devereux, Petter Lundborg and Kaveh Majlesi

No 9227, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Wealth is highly correlated between parents and their children; however, little is known about the extent to which these relationships are genetic or determined by environmental factors. We use administrative data on the net wealth of a large sample of Swedish adoptees merged with similar information for their biological and adoptive parents. Comparing the relationship between the wealth of adopted and biological parents and that of the adopted child, we find that, even prior to any inheritance, there is a substantial role for environment and a much smaller role for genetics. We also examine the role played by bequests and find that, when they are taken into account, the role of adoptive parental wealth becomes much stronger. Our findings suggest that wealth transmission is not primarily because children from wealthier families are inherently more talented or more able but that, even in relatively egalitarian Sweden, wealth begets wealth.

Keywords: nature versus nurture; intergenerational mobility; portfolio allocation (search for similar items in EconPapers)
JEL-codes: G11 J01 J13 J62 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2015-07
New Economics Papers: this item is included in nep-lab and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (56)

Published - published in: Review of Economic Studies, 2020, 87 (4), 1683–1725.

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Related works:
Journal Article: Poor Little Rich Kids? The Role of Nature versus Nurture in Wealth and Other Economic Outcomes and Behaviours (2020)
Working Paper: Poor Little Rich Kids? The Determinants of the Intergenerational Transmission of Wealth (2015)
Working Paper: Poor Little Rich Kids? The Determinants of the Intergenerational Transmission of Wealth (2015)
Working Paper: Poor Little Rich Kids? The Role of Nature versus Nurture in Wealth and Other Economic Outcomes and Behaviors (2015)
Working Paper: Poor Little Rich Kids? - The Determinants of the Intergenerational Transmission of Wealth (2015)
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