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Paper abstract bibtex

Paper abstract bibtex

Inheritances reduce relative measures of wealth inequality according to recent evidence from several countries. Using a theoretical model and Swedish administrative data, we first show that this counterintuitive finding can be explained by high intergenerational wealth mobility and low inheritance inequality relative to wealth inequality. We then exploit two quasi-experiments: randomness in the timing of death and an inheritance tax repeal. We find that the equalizing effect of inheritances is short-lasting and reverted within a decade since less wealthy heirs deplete their inherited wealth rapidly in contrast to more affluent heirs. This depletion represents a constant reduction in annual savings equivalent in size to 10% of the average inheritances amount. 70% of this additional annual non-labor income are allocated to consumption (half of it is car purchases) in the first years, compared to 90% in later years. The remaining 30% (or 10%) reflect a considerable albeit declining labor supply elasticity with respect to inheritances. Taken together, our findings suggest that inheritance taxation can reduce long-run wealth inequality solely through the taxation of very large inheritances.

@unpublished{nekoeiHowInheritancesShape2019, title = {How {{Do Inheritances Shape Wealth Inequality}}? {{Theory}} and {{Evidence}} from {{Sweden}}}, author = {Nekoei, Arash and Seim, David}, date = {2019}, journaltitle = {SSRN}, publisher = {{SSRN}}, url = {https://papers.ssrn.com/sol3/Papers.cfm?abstract_id=3192778}, abstract = {Inheritances reduce relative measures of wealth inequality according to recent evidence from several countries. Using a theoretical model and Swedish administrative data, we first show that this counterintuitive finding can be explained by high intergenerational wealth mobility and low inheritance inequality relative to wealth inequality. We then exploit two quasi-experiments: randomness in the timing of death and an inheritance tax repeal. We find that the equalizing effect of inheritances is short-lasting and reverted within a decade since less wealthy heirs deplete their inherited wealth rapidly in contrast to more affluent heirs. This depletion represents a constant reduction in annual savings equivalent in size to 10\% of the average inheritances amount. 70\% of this additional annual non-labor income are allocated to consumption (half of it is car purchases) in the first years, compared to 90\% in later years. The remaining 30\% (or 10\%) reflect a considerable albeit declining labor supply elasticity with respect to inheritances. Taken together, our findings suggest that inheritance taxation can reduce long-run wealth inequality solely through the taxation of very large inheritances.}, pagetotal = {1–126}, keywords = {Intergenerational Transfers of Wealth}, file = {C\:\\Users\\lukis\\AppData\\Roaming\\Zotero\\Zotero\\Profiles\\h20ej2eu.default\\zotero\\storage\\LFZ8GGLR\\Nekoei_Seim_2019_How Do Inheritances Shape Wealth Inequality.pdf} }

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