Wealth Inequality, Intergenerational Transfers and Family Background

45 Pages Posted: 18 Jun 2020 Last revised: 9 Aug 2021

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, CEDESOG and Equalitas

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: July 24, 2021

Abstract

We estimate the contribution of intergenerational transfers (inheritances and gifts) and family background to wealth inequality in four OECD countries: France, Spain, Great Britain and the U.S. We compare the observed wealth distribution with a non-parametric counterfactual distribution where all differences in wealth associated with intergenerational transfers and family background are removed. Despite the diversity of the countries analysed, we find similar patterns. The combined contribution of intergenerational transfers and family background to wealth inequality is sizeable in the four countries, ranging from 36% in Great Britain to 49% in the U.S. When interactions between the two factors are accounted for, and the Shapley value decomposition is used to fully disentangle the contribution of each factor based on its marginal contribution, intergenerational transfers account for between 26% in Great Britain to 36% of wealth inequality in France, with family background ranging from 9% in France to 17% in the U.S.

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

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 Family Background (July 24, 2021). 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, CEDESOG and Equalitas ( 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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