Wealth Inequality, Intergenerational Transfers and Socioeconomic Background

37 Pages Posted: 18 Jun 2020 Last revised: 18 Sep 2020

See all articles by Juan C. Palomino

Juan C. Palomino

Institute for New Economic Thinking and Department of Social Policy and Intervention - University of Oxford

Gustavo A. Marrero

University of La Laguna

Brian Nolan

Institute for New Economic Thinking at the Oxford Martin School

Juan Gabriel Rodriguez

Universidad Complutense de Madrid (UCM) - Instituto Complutense de Análisis Económico | ICAE

Date Written: June 9, 2020

Abstract

This paper estimates the contribution of intergenerational transfers (inheritances and gifts) and socioeconomic background to wealth inequality in four OECD countries: France, Spain, Great Britain and the United States. We compare the observed wealth distribution with a non-parametric counterfactual distribution where all differences in wealth associated with the intergenerational transfers received and the socioeconomic background have been removed. Despite the diversity of the four countries analysed, we find similar patterns in the results. The combined contribution of intergenerational transfers and socioeconomic background to wealth inequality is sizeable in the four countries, ranging from 37% in Great Britain to 48% in the US. When interactions between the two factors are accounted for, the net contribution of inheritances and gifts is between 23% and 30%, while the net contribution of family background lies between 4% and 11%. These values are substantial and reveal that the importance of intergenerational transfers in wealth inequality, across all these countries, is at least twice that of socioeconomic background.

Keywords: Wealth, Inequality; Inheritances; France; Spain; Great Britain; United States

JEL Classification: D31, D63, I24

Suggested Citation

Palomino, Juan C. and Marrero, Gustavo A. and Nolan, Brian and Rodriguez, Juan Gabriel, Wealth Inequality, Intergenerational Transfers and Socioeconomic Background (June 9, 2020). Available at SSRN: https://ssrn.com/abstract=3623547 or http://dx.doi.org/10.2139/ssrn.3623547

Juan C. Palomino (Contact Author)

Institute for New Economic Thinking and Department of Social Policy and Intervention - University of Oxford ( email )

Gustavo A. Marrero

University of La Laguna ( email )

38071 La Laguna
Tenerife
Spain
(+34) 922 31 90 00/01 (Phone)

Brian Nolan

Institute for New Economic Thinking at the Oxford Martin School ( email )

Eagle House
Walton Well Road
Oxford, OX2 6ED
United Kingdom
+441865610401 (Phone)

Juan Gabriel Rodriguez

Universidad Complutense de Madrid (UCM) - Instituto Complutense de Análisis Económico | ICAE ( email )

Pozuelo, MADRID 28260
Spain

HOME PAGE: http://https://sites.google.com/site/juangabr71/

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