A Flying Start intergenerational Transfers, Wealth Accumalation, and Entrepreneurship of Descendants

Elin Colmsjoe
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Elin Colmsjoe: Department of Economics, University of Copenhagen

No 24-02, CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI)

Abstract: Wealth is highly correlated across generations. This study explores how intergenerational inter vivos transfers influence the long-run wealth accumulation of individuals by supporting ownership of housing and private businesses early in the life cycle. In Denmark, a specific tax scheme encourages parents to make transfers by selling housing at a discounted price to their children. The policy makes it possible to identify a large portion of untaxed wealth transfers in the administrative data. Using exogenous variation in transfer amounts, I find that larger transfers lead to significant gains in recipient housing wealth and business ownership over the next ten years. Greater credit access and lower interest rates, stemming from parents financial contributions, underpin the effects. Benefits of transfers are more pronounced when received at younger ages, indicating the importance of their timing in the life cycle for lifelong wealth building.

Keywords: Intergenerational transmission; wealth; inter vivos transfers; entrepreneurship; Credit (search for similar items in EconPapers)
JEL-codes: C14 C78 D11 (search for similar items in EconPapers)
Pages: 37
Date: 2025-03-25
New Economics Papers: this item is included in nep-his and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kucebi:2402

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