Intergenerational Transfers and Wealth in the Euro-Area: The Relevance of Inheritances and Gifts in Absolute and Relative Terms

42 Pages Posted: 9 Mar 2016

See all articles by Anita Tiefensee

Anita Tiefensee

affiliation not provided to SSRN

Christian Westermeier

German Institute for Economic Research (DIW Berlin)

Date Written: March 2016

Abstract

Private wealth is a crucial factor for the economic well‐being of households. Key determinants of private wealth include intergenerational wealth transfers (gifts and inheritances), which are gaining importance since 1990, as research suggests. We conduct a detailed investigation of the distribution of wealth transfers in eight Euro‐area countries. First, we investigate the patterns of prevalence and level of past wealth transfers in the individual countries: Who received transfers, and what is their present value in absolute terms? We find that in most countries the percentages of households with a transfer as well as the mean present value of those transfers is increasing along the distribution of net wealth. Using a series of country‐specific multivariate regressions, we find that households with higher income and education levels have both a higher probability of receiving transfers and higher absolute transfer value. We then analyze the present value of transfers as a percent of current net worth. Here, in relative terms, some of the results are reversed, as the relative importance of intergenerational transfers does not increase with the level of wealth or income. Using a fractional logit regression we conclude that for higher income quintiles the share of current net worth due to past intergenerational transfers tends to be decreasing.

Keywords: Intergenerational transfers, inheritances and gifts, wealth distribution

JEL Classification: D64, D31, D14

Suggested Citation

Tiefensee, Anita and Westermeier, Christian, Intergenerational Transfers and Wealth in the Euro-Area: The Relevance of Inheritances and Gifts in Absolute and Relative Terms (March 2016). DIW Berlin Discussion Paper No. 1556, Available at SSRN: https://ssrn.com/abstract=2745232 or http://dx.doi.org/10.2139/ssrn.2745232

Anita Tiefensee

affiliation not provided to SSRN

Christian Westermeier (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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