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Poor Little Rich Kids? The Determinants of the Intergenerational Transmission of Wealth

På svenska

Author

Summary, in English

Wealth is highly correlated between parents and their children; however, little is known about the extent to which these relationships are genetic or determined by environmental factors. We use administrative data on the net wealth of a large sample of Swedish adoptees merged with similar information for their biological and adoptive parents. Comparing the relationship between the wealth of adopted and biological parents and that of the adopted child, we find that, even prior to any inheritance, there is a substantial role for environment and a much smaller role for pre-birth factors. We also examine the role played by bequests and find that, when they are taken into account, the role of adoptive parental wealth becomes much stronger. We find very little evidence that education or earnings of parents or children are important drivers of the intergenerational wealth relationship between children and their adoptive parents. Our findings suggest that wealth transmission is not primarily because children from wealthier families are inherently more talented or more able but that, even in relatively egalitarian Sweden, wealth begets wealth.

Publishing year

2015

Language

English

Publication/Series

Working Paper / Department of Economics, School of Economics and Management, Lund University

Issue

21

Document type

Working paper

Publisher

Department of Economics, Lund University

Topic

  • Economics

Keywords

  • portfolio allocation
  • intergenerational mobility
  • nature versus nurture

Status

Published