Working Paper: NBER ID: w21896
Authors: Simon H. Boserup; Wojciech Kopczuk; Claus T. Kreiner
Abstract: Using Danish administrative data, we estimate the impact of bequests on the level and inequality of wealth. We employ an event study design where we follow the distribution of wealth over time of people who are 45-50 years old, and divide them into treatment group and control group depending on whether a parent dies or not. Bequests account for 26 percent of the average post-bequest wealth 1-3 years after parental death and significantly affect wealth throughout the distribution. We find that bequests increase measures of absolute wealth inequality (variance), but reduce relative inequality (top wealth shares). Following the receipt of bequests, variance of the distribution censored at the top/bottom 1% increases by 33 percent, but the top 1% share declines by 6 percentage points from an initial level of 31 percent and the top 10% share declines by 10 percentage points from a base of around 81 percent.
Keywords: bequests; wealth inequality; Danish wealth records
JEL Codes: D31; E21; J62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| wealth distribution (D31) | top 1% wealth share (D33) |
| wealth distribution (D31) | relative inequality (D63) |
| bequests (D64) | wealth distribution (D31) |
| bequests (D64) | wealth variance (D31) |
| wealth distribution (D31) | absolute wealth inequality (D31) |