Bequests, Taxation and the Distribution of Wealth in a General Equilibrium Model

34 Pages Posted: 1 Jun 2006

See all articles by Christian Kleiber

Christian Kleiber

University of Dortmund - Department of Statistics

Martin Sexauer

KPMG, Germany

Klaus Wälde

University of Mainz; CESifo (Center for Economic Studies and Ifo Institute); UCL at Louvain la Neuve

Date Written: May 2006

Abstract

This paper examines the role of bequests and of taxation on bequests for the distribution of wealth. We investigate a model with overlapping generations and heterogenous households where parents derive utility directly from their bequests. Using the coefficient of variation as the measure of inequality, bequests per se diminish the inequality of wealth since they raise private savings and hence average wealth holdings more than the variance of wealth. From a policy perspective, taxing bequests and redistributing government revenue lump-sum among the young generation further decreases wealth inequality.

Keywords: bequest, taxation, wealth inequality, OLG model, analytical solution

JEL Classification: D310, H230

Suggested Citation

Kleiber, Christian and Sexauer, Martin and Wälde, Klaus, Bequests, Taxation and the Distribution of Wealth in a General Equilibrium Model (May 2006). CESifo Working Paper Series No. 1723, Available at SSRN: https://ssrn.com/abstract=905755 or http://dx.doi.org/10.2139/ssrn.905755

Christian Kleiber

University of Dortmund - Department of Statistics ( email )

D-44221 Dortmund
Germany

Martin Sexauer

KPMG, Germany ( email )

Dusseldorf
Germany

Klaus Wälde (Contact Author)

University of Mainz ( email )

Mainz School of Management and Economics
Mainz, 55128
Germany
+49 6131 3920143 (Phone)

HOME PAGE: http://www.waelde.com

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

UCL at Louvain la Neuve

Place Montesquieu, 3
Louvain-la-Neuve, 1348
Belgium

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