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

Michele Bavaro, Stefano Boscolo () and Simone Tedeschi

INET Oxford Working Papers from Institute for New Economic Thinking at the Oxford Martin School, University of Oxford

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 (IGTs) on wealth inequality, various scenarios are compared to a baseline. Results suggest that net wealth inequality will remain stable until 2040, when it is expected to rise progressively, especially due to the rising role of IGTs. Demographic factors like increased life expectancy and declining fertility are the main explanations for this phenomenon. Finally, while some assumptions, like accounting for no behavioural adjustments in response to tax changes, have limitations, this study provides valuable insights into potential effects and timelines for inheritance tax reforms on long-term inequality transmission.

Keywords: intergenerational transfers; inheritance; taxation; wealth inequality; capital income; dynamic microsimulation. (search for similar items in EconPapers)
Pages: 25 pages
Date: 2024-01
New Economics Papers: this item is included in nep-age, nep-cmp and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:amz:wpaper:2024-01

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