TY - JOUR
T1 - Wealth inequality and intergenerational links
AU - De Nardi, Maria Cristina
PY - 2004/7
Y1 - 2004/7
N2 - 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.
AB - 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.
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U2 - 10.1111/j.1467-937X.2004.00302.x
DO - 10.1111/j.1467-937X.2004.00302.x
M3 - Article
AN - SCOPUS:3843141811
SN - 0034-6527
VL - 71
SP - 743
EP - 768
JO - Review of Economic Studies
JF - Review of Economic Studies
IS - 3
ER -