Income Inequality Early in Life: Underage Children as Owners of Privately Held Firms

Tuuli Paukkeri () and Terhi Ravaska ()
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Tuuli Paukkeri: VATT Institute for Economic Research
Terhi Ravaska: Tampere University

No 35, Working Papers from Finnish Centre of Excellence in Tax Systems Research

Abstract: We present new evidence that privately held firms are used to transfer income to underage children. This exacerbates wealth and income inequality among children and persists at least into early adulthood. Underage children at the top 1% of the parental income distribution are 20 times more likely to be owners of a privately held firm compared to children in the bottom 90%. The average age of these underage firm owners is 12 years, with ownership occurring across all ages from 0 to 17. Tracking data across generations shows that nearly half of these underage children come from non-entrepreneurial family backgrounds.

Keywords: privately held firms; income inequality; income mobility; family business; dynastic wealth (search for similar items in EconPapers)
JEL-codes: D3 H2 H3 M1 (search for similar items in EconPapers)
Pages: 25
Date: 2025-08
New Economics Papers: this item is included in nep-ent
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Published in FIT Working Paper Series, Finnish Center of Excellence in Tax Systems Research

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