DP11387 Inherited Wealth and Demographic Aging
| Author(s): | Harun Onder, Pierre Pestieau |
| Publication Date: | July 2016 |
| Keyword(s): | aging, bequest motives, inherited wealth |
| JEL(s): | |
| Programme Areas: | Public Economics |
| Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=11387 |
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 o set and potentially reverse these e ects. We also show that aging could increase the size of individual bequests vis-à-vis real wages. However, these bequests will be more unequally distributed if aging is driven by a drop in fertility. In comparison, the e ect of increasing longevity on their distribution in non-monotonic.