Simulating Long-Run Wealth Distribution and Transmission: The Role of Intergenerational Transfers

Michele Bavaro (), Stefano Boscolo () and Simone Tedeschi ()
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Michele Bavaro: University of Oxford
Stefano Boscolo: University of Milan
Simone Tedeschi: University of Cassino and Southern Lazio

Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, 2025, vol. 11, issue 3, No 5, 947-981

Abstract: Abstract This paper utilises the Italian Treasury DYnamic Microsimulation Model (T-DYMM) to project individual and household economic trends up to 2070, focusing on the intergenerational transmission of wealth inequality. To analyse the impact of intergenerational transfers on wealth inequality, various scenarios are compared to a baseline. The results suggest that net wealth inequality is expected to remain fairly stable until 2040, when it is expected to increase progressively, especially due to the rising size and inequality of intergenerational transfers. Demographic factors such as increased life expectancy and declining fertility are the main explanations for this phenomenon. Although certain assumptions, such as disregarding behavioural adjustments in response to tax changes, have their limitations, this study offers valuable insights into the potential impacts and timelines of inheritance tax reforms on long-term inequality transmission.

Keywords: Intergenerational transfers; Inheritance; Wealth inequality; Dynamic microsimulation (search for similar items in EconPapers)
JEL-codes: D31 H23 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s40797-024-00304-3

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