Luigi Guiso, Luigi Pistaferri, 14 May 2022

The literature on assortative mating has largely focused on whether children of wealthy parents tend to marry children of similarly wealthy parents. Using data from Norway, this column shows that people tend to match based on their own pre-marriage wealth, not their parent’s wealth, and that individuals also match based on their personal returns to wealth. Among wealthy couples, the partner with the highest pre-marriage return tends to manage the household’s assets, allowing the households to grow their assets even faster over time and boosting wealth concentration. 

Juan C. Palomino, Gustavo A. Marrero, Brian Nolan, Juan Gabriel Rodríguez, 09 February 2022

Wealth inequality can limit people’s ability to accumulate human capital, carry out business projects, or cope with major economic crises. Focusing on France, Spain, the UK, and the US, this column shows that intergenerational transfers, such as inheritances and inter vivos gifts, play a significant role in underpinning wealth inequality. When inheritances and gifts exceed a certain threshold, the opportunities to accumulate more wealth are greatly expanded.

Brian Nolan, Juan C. Palomino, Philippe Van Kerm, Salvatore Morelli, 19 September 2020

Whether and how much intergenerational transfers contribute to wealth inequality is still subject to debate. This column analyses household survey data on inheritance and gifts inter vivos in France, Germany, Great Britain, Ireland, Italy, Spain, and the US to relate current household wealth levels and inequality to the receipt of intergenerational wealth transfers. In these countries, large transfers increase overall wealth inequality. Strengthening taxation capacity and instating lifetime capital acquisitions tax for gifts and inheritances may help counter the dis-equalising effect of intergenerational transfers.

Simon Boserup, Wojciech Kopczuk, Claus Thustrup Kreiner, 11 March 2016

It is often suggested that intergenerational bequests such as inheritances create and perpetuate wealth inequality. This column uses Danish data to explore the effects of bequests on the wealth distribution. While bequests are found to increase the dispersion of absolute wealth inequality, relative inequality declines. These findings suggest that inheritance alone need not increase wealth inequality.

Ravi Kanbur, Joseph Stiglitz, 18 August 2015

Growth theories traditionally focus on the Kaldor-Kuznets stylised facts. Ravi Kanbur and Nobelist Joe Stiglitz argue that these no longer hold; new theory is needed. The new models need to drop competitive marginal productivity theories of factor returns in favour of rent-generating mechanism and wealth inequality by focusing on the ‘rules of the game.’ They also must model interactions among physical, financial, and human capital that influence the level and evolution of inequality. A third key component will be to capture mechanisms that transmit inequality from generation to generation.

Francesco Billari, Vincenzo Galasso, 07 November 2008

Economic theory views children as investment or consumption goods. Using Italian pension reforms as a natural experiment, this column find evidence that supports the “children as investment” view.

Vincenzo Galasso, Roberta Gatti, Paola Profeta, 12 May 2008

In traditional societies, old age support was guaranteed by intergenerational transfers within the family from young to old, but the weakening of family ties in modern societies has justified the introduction of social security systems, thus reducing the incentive to have children. The authors of CEPR DP6825 argue that pension generosity and development of capital markets are crucial to understand fertility decisions, as the role of children as a form of retirement saving for their parents is particularly strong in economies with limited or non-existent access to financial markets.


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