Wealth Inequality and Intergenerational Links

Mariacristina deNardi
Additional contact information
Mariacristina deNardi: Federal Reserve Bank of Chicago
Authors registered in the RePEc Author Service: Mariacristina De Nardi

No 547, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: Empirical studies have shown that, for many countries, the distribution of wealth is much more concentrated than the one of labor earnings and that households with higher levels of lifetime income have higher lifetime saving rates. Previous models have had difficulty in generating these features. I construct a computable general equilibrium model with overlapping generations in which parents and children are linked by bequests and earnings persistence within families. I show that voluntary bequests are important to explain the emergence of large estates that characterize the top of the wealth distribution, while accidental bequests are not. In addition, the introduction of a bequest motive generates lifetime saving profiles more consistent with the data. Allowing for earnings persistence within families generates an even more concentrated wealth distribution. A cross-country comparison between the U.S. and Sweden shows that intergenerational linkages are important to explain the upper tail of the wealth distribution also in economies where redistribution programs are more prominent and there is less inequality. Moreover Sweden, with its generous social safety net, has a larger fraction of people with zero or negative wealth. The model is capable of reproducing this feature as well.

Date: 2000-08-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

Downloads: (external link)
http://fmwww.bc.edu/RePEc/es2000/0547.pdf main text (application/pdf)

Related works:
Journal Article: Wealth Inequality and Intergenerational Links (2004)
Working Paper: Wealth inequality and intergenerational links (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecm:wc2000:0547

Access Statistics for this paper

More papers in Econometric Society World Congress 2000 Contributed Papers from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Christopher F. Baum ().