DP11456 Intergenerational wealth mobility and the role of inheritance: Evidence from multiple generations

Author(s): Adrian Adermon, Mikael Lindahl, Daniel Waldenström
Publication Date: August 2016
Keyword(s): Income mobility, inequality, Inheritance
JEL(s): D31, J62
Programme Areas: Public Economics, Economic History
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=11456

This study estimates intergenerational correlations in mid-life wealth across three generations, and a young fourth generation, and examines how much of the parent-child association that can be explained by inheritances. Using a Swedish data set we find parent-child rank correlations of 0.3-0.4 and grandparents-grandchild rank correlations of 0.1-0.2. Conditional on parents' wealth, grandparents' wealth is weakly positively associated with grandchild's wealth and the parent-child correlation is basically unchanged if we control for grandparents' wealth. Bequests and gifts strikingly account for at least 50 per cent of the parent-child wealth correlation while earnings and education are only able to explain 25 per cent.