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12:30 - 13:45 17 February 2016

Inheritance and Wealth Inequality


IFS Basement | Institute for Fiscal Studies (link Map)
7 Ridgmount Street | London | WC1E 7AE | United Kingdom

Open to: Academic | Student
Ticketing: Open

Speaker information

Arash Nekoei, Institute for International Economic Studies

How does inheritance affect wealth inequality in the short and long run? Using Swedish administrative data and two empirical strategies (randomness of bequest timing and an inheritance tax reform), we estimate the effect of receiving an inheritance on the distribution of wealth among heirs. Heirs in the bottom 99% of the wealth distribution consume their inheritance in less than 10 years. Even for the top 1% the remaining inheritance as a share of total wealth is steadily declining after receiving the original bequest. This implies that inheritance decreases short-run wealth inequality, increases it in the medium run, but plays only a marginal role in the long run. We also estimate the dynamic effects of inheritance on all elements of the heir's budget constraint, and we find that bequests increase consumption of leisure, supporting the Carnegie conjecture, as well as consumption of goods.


Institute for Fiscal Studies
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