 Intergenerational wealth transmission in Great BritainNo 21-06, CEPEO Working Paper Series from UCL Centre for Education Policy and Equalising Opportunities Abstract: The aim of this paper is to document the intergenerational persistence of wealth between adult offspring and their parent's using the Wealth and Assets Survey for Great Britain. As parental wealth it is not directly observed it is assessed as mean values based on age, home ownership and education from retrospective questions. Estimates are then derived employing a commonly used two stage estimator. For offspring aged around 44 and parents aged around 74, the oldest where wealth can reliably be observed in the sample, the intergenerational wealth elasticity (IWE) is 0.4 and the rank-rank elasticity 0.3. However, wealth is a stock accumulated over a person's working life and then dissaving takes place in retirement. Thus, peak wealth holding occurs around the age of 64 and this represents a proxy measure of life-time wealth accumulation. Under certain assumptions about parental wealth holding we explore wealth persistence for older offspring up to age 64. Importantly, we find at these older ages wealth persistence is generally lower than for those currently aged in their 30s and early 40s, though rank based estimates are broadly stable. The average IWE is 0.35 (ages 28-64) and rank equivalent 0.3 in 2012. For those in their 30s however, the IWE is 0.4, even though the short panel suggests a strong life cycle bias where wealth persistence is lower at ages below 64. Exploration of this contradiction shows that those who have a relatively high wealth among older cohorts came from more typical backgrounds than in younger ones. The six year panel data also shows that intergenerational wealth elasticity is 3.8 percentage points higher when comparing people with those the same age six years previously. There is, thus, very strong evidence of higher wealth intergenerational persistence in younger age cohorts. As it was already higher than for older cohorts and has risen rapidly, standing at 0.44 (ages 32-44) by 2018. Keywords: Wealth; Inequality; intergenerational mobility; Great Britain. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ucl:cepeow:21-06 Access Statistics for this paper More papers in CEPEO Working Paper Series from UCL Centre for Education Policy and Equalising Opportunities Contact information at EDIRC. |
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