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Title: Inherited Wealth and Demographic Aging

Author(s): Harun Onder and Pierre Pestieau

Publication Date: July 2016

Keyword(s): aging, bequest motives and inherited wealth

Programme Area(s): Public Economics

Abstract: The role of inherited wealth in modern economies has increasingly become under scrutiny. This study presents one of the first attempts to shed light on how demographic aging could shape this role. We show that, in the absence of retirement annuities, or for a given level of annuitization, both increasing longevity and decreasing fertility should reduce the inherited share of total wealth in a given economy. Thus, aging is not likely to explain a recent surge in this share in some advanced economies. Shrinking retirement annuities, however, could oset and potentially reverse these eects. We also show that aging could increase the size of individual bequests vis--vis real wages. However, these bequests will be more unequally distributed if aging is driven by a drop in fertility. In comparison, the eect of increasing longevity on their distribution in non-monotonic.

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Bibliographic Reference

Onder, H and Pestieau, P. 2016. 'Inherited Wealth and Demographic Aging'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11387