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

Author(s): Simon H. Boserup, Wojciech Kopczuk and Claus T. Kreiner

Publication Date: January 2016

Keyword(s): bequests, intergenerational mobility, wealth and wealth inequality

Programme Area(s): Labour Economics, Macroeconomics and Growth and Public Economics

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.

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Bibliographic Reference

Boserup, S, Kopczuk, W and Kreiner, C. 2016. 'The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records'. London, Centre for Economic Policy Research. http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=11059