Journal Article

Wealth Inequality and Intergenerational Links

Mariacristina De Nardi

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 71, issue 3, pages 743-768
Published in print July 2004 | ISSN: 0034-6527
Published online July 2004 | e-ISSN: 1467-937X | DOI:
Wealth Inequality and Intergenerational Links

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  • Welfare Economics
  • Intertemporal Choice and Growth
  • Microeconomics


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Previous work has had difficulty generating household saving behaviour that makes the distribution of wealth much more concentrated than that of labour earnings, and that makes the richest households hold onto large amounts of wealth, even during very old age. I construct a quantitative, general equilibrium, overlapping-generations model in which parents and children are linked by accidental and voluntary bequests and by earnings ability. I show that voluntary bequests can explain the emergence of large estates, while accidental bequests alone cannot, and that adding earnings persistence within families increases wealth concentration even more. I also show that the introduction of a bequest motive generates lifetime savings profiles more consistent with the data.

Keywords: D31; D64; D91

Journal Article.  12440 words.  Illustrated.

Subjects: Welfare Economics ; Intertemporal Choice and Growth ; Microeconomics

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