Like Father, Like Son: Inheriting and Bequeathing

Lars Kunze

No 318, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Empirical evidence suggests that parents who have themselves inherited from their own parents are more likely to leave an estate to their children even after controlling for income, wealth and education. This implies an indirect reciprocal behavior between three generations by transmitting the attitude towards bequeathing from one generation to the next. We incorporate such an intergenerational chain into an overlapping generations model and show that the economy might be characterized by multiple steady states involving poverty traps. Individuals will not leave bequests unless per capita income levels exceed a threshold level. In such a situation, an unfunded social security security programme may help to overcome poverty by providing additional old age income out of which to bequeath.

Keywords: Capital accumulation; indirect reciprocity; overlapping generations; unfunded social security (search for similar items in EconPapers)
JEL-codes: D64 D91 H55 (search for similar items in EconPapers)
Date: 2012
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Journal Article: Like Father, Like Son: Inheriting and Bequeathing (2019)
Journal Article: Like Father, Like Son: Inheriting and Bequeathing (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:318

DOI: 10.4419/86788367

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