The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records

Simon Boserup (), Wojciech Kopczuk and Claus Kreiner

No 21896, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using Danish administrative data, we estimate the impact of bequests on the level and inequality of wealth. We employ an event study design where we follow the distribution of wealth over time of people who are 45-50 years old, and divide them into treatment group and control group depending on whether a parent dies or not. Bequests account for 26 percent of the average post-bequest wealth 1-3 years after parental death and significantly affect wealth throughout the distribution. We find that bequests increase measures of absolute wealth inequality (variance), but reduce relative inequality (top wealth shares). Following the receipt of bequests, variance of the distribution censored at the top/bottom 1% increases by 33 percent, but the top 1% share declines by 6 percentage points from an initial level of 31 percent and the top 10% share declines by 10 percentage points from a base of around 81 percent.

JEL-codes: D31 E21 J62 (search for similar items in EconPapers)
Date: 2016-01
New Economics Papers: this item is included in nep-eur
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Published as Simon H. Boserup & Wojciech Kopczuk & Claus T. Kreiner, 2016. "The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records," American Economic Review, vol 106(5), pages 656-661.

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Journal Article: The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records (2016)
Working Paper: The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records (2016)
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