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Inheritance and wealth inequality: Evidence from population registers

Mikael Elinder (), Oscar Erixson and Daniel Waldenström ()

No 11191, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We use new population-wide register data on inheritances and wealth in Sweden to estimate the causal impact of inheritances on wealth inequality. We find that inheritances reduce relative wealth inequality (e.g., the Gini coefficient falls by 5-10 percent) but that absolute dispersion increases. Examining different parts of the wealth distribution, we find that the top decile's wealth share decreases substantially, whereas the wealth share of the bottom half increases from a negative to a positive share. In essence, wealthier heirs inherit larger amounts, but less wealthy heirs inherit more relative to their pre-inheritance wealth. We also find that post-inheritance behavioral adjustments mitigate the equalizing effect of inheritances because less wealthy heirs consume larger shares of their inheritances. Moreover, we find that the Swedish inheritance tax reduced the equalizing inheritance effect but that the redistribution of tax revenues could reverse this result. Finally, we show that inheritances increase wealth mobility.

Keywords: bequests; estates; inheritance taxation; net worth; wealth distribution (search for similar items in EconPapers)
JEL-codes: D63 E21 H24 (search for similar items in EconPapers)
Date: 2016-03
New Economics Papers: this item is included in nep-mac and nep-pbe
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Related works:
Journal Article: Inheritance and wealth inequality: Evidence from population registers (2018) 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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