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Inheritance and wealth inequality: Evidence from population registers

Mikael Elinder (), Oscar Erixson and Daniel Waldenström

Journal of Public Economics, 2018, vol. 165, issue C, 17-30

Abstract: This paper uses population register data on inheritances and wealth in Sweden to estimate the causal impact of inheritances on wealth inequality. We find that inheritances reduce wealth inequality, as measured by the Gini coefficient or top wealth shares, but that they increase absolute dispersion. This duality in effects stems from the fact that even though richer heirs inherit larger amounts, the relative importance of the inheritance is larger for less wealthy heirs, who inherit more relative to their pre-inheritance wealth. This is in part driven by the fact that heirs do not inherit debts, which makes the distribution of inheritances more equal than the distribution of wealth among the heirs. Behavioral adjustments seem to mitigate the equalizing effect of inheritances, possibly through higher consumption among the poorer heirs. Inheritance taxation counteracts the equalizing inheritance effect, but redistribution of inheritance tax revenues can reverse this result and make the inheritance tax equalizing. Finally, we also find that inheritances increase intragenerational wealth mobility, but the effect is short-lived.

Keywords: Bequests; Estates; Net worth; Inheritance taxation; Wealth distribution (search for similar items in EconPapers)
JEL-codes: H24 D63 E21 (search for similar items in EconPapers)
Date: 2018
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Related works:
Working Paper: Inheritance and wealth inequality: Evidence from population registers (2016) Downloads
Working Paper: Inheritance and Wealth Inequality: Evidence from Population Registers (2016) Downloads
Working Paper: Inheritance and Wealth Inequality: Evidence from Population Registers (2016) Downloads
Working Paper: Inheritance and wealth inequality: Evidence from population registers (2015) Downloads
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