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

19 Pages Posted: 27 Jan 2016

See all articles by Simon Halphen Boserup

Simon Halphen Boserup

University of Copenhagen

Wojciech Kopczuk

Columbia University - Graduate School of Arts and Sciences - Department of Economics; Columbia University - School of International & Public Affairs (SIPA); National Bureau of Economic Research (NBER)

Claus Thustrup Kreiner

University of Copenhagen - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: January 2016

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 divided 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 receipts 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.

Keywords: bequests, intergenerational mobility, wealth, wealth inequality

JEL Classification: D31, E21, J62

Suggested Citation

Boserup, Simon Halphen and Kopczuk, Wojciech and Kreiner, Claus Thustrup, The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records (January 2016). CEPR Discussion Paper No. DP11059. Available at SSRN: https://ssrn.com/abstract=2723320

Simon Halphen Boserup (Contact Author)

University of Copenhagen ( email )

Nørregade 10
Copenhagen, København DK-1165
Denmark

Wojciech Kopczuk

Columbia University - Graduate School of Arts and Sciences - Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States

Columbia University - School of International & Public Affairs (SIPA)

420 West 118th Street
New York, NY 10027
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Claus Thustrup Kreiner

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark

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