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: The contribution of dynastic wealth transfers to inequality depends on how recipients use them. This study examines how intergenerational inter vivos transfers affect wealth accumulation by shaping savings and investment behavior early in life. In Denmark, a tax policy allows parents to transfer wealth by selling housing to their children below market value, enabling the identification of large, untaxed transfers in administrative data. Receiving an average (USD $100,000) transfer raises business ownership by 31% and stock market participation by 17% over the subsequent decade, with effects increasing in transfer size. Instrumenting transfer amounts with a policy-determined transfer cap reduces but maintains significant investment responses, suggesting that transfers directly support wealth accumulation via behavioral channels. The effects are concentrated amongst recipients with high financial ability—proxied by holding a degree in business, economics or engineering. This group is also more likely to be targeted with housing transfers by parents in a group of siblings.

Keywords: Intergenerational transmission; wealth; inter vivos transfers; entrepreneurship (search for similar items in EconPapers)
JEL-codes: D31 G51 J62 (search for similar items in EconPapers)
Pages: 51
Date: 2025-09-08
New Economics Papers: this item is included in nep-his and nep-sbm
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