Hometown growth and individual wealth accumulation *

How does economic growth aect the distribution of wealth? Combining wealth records from the SocioEconomic Panel (SOEP) and local GDP growth across 401 German counties, this paper documents a sizable Hometown-Growth-Wealth Nexus. Using a standard OLG model to guide our estimation strategy, we nd that, because of hometown growth, a person born in ourishing Munich will have accumulated two to three times more wealth than a person born in the declining industrial Ruhr area. Individuals exposed to high growth during childhood save more and are more likely to be invested in housing. While this savings channel operates for heirs and nonheirs alike, heirs are richer than non-heirs from the same hometown. We validate the Hometown-Growth-Wealth Nexus and the savings channel for the United Kingdom using UKHLS wealth records and GDP growth across 10 regions (NUTS2).

Keywords: wealth distribution, regional inequality, intergenerational transmission JEL Classications: D31, D64, O47

JEL Classification: D31, D64, O47

Suggested Citation: Suggested Citation

Bartels, Charlotte and König, Johannes and Schröder, Carsten, Hometown growth and individual wealth accumulation * (July 12, 2024). Available at SSRN: https://ssrn.com/abstract=4892823 or http://dx.doi.org/10.2139/ssrn.4892823