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The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records
Simon H. Boserup, Wojciech Kopczuk, and Claus T. Kreiner
American Economic Review. May 2016, Vol. 106, No. 5: Pages 656-661

The Role of Bequests in Shaping Wealth Inequality: Evidence from Danish Wealth Records

Simon H. Boserup1, Wojciech Kopczuk2 and Claus T. Kreiner3

1Department of Economics, University of Copenhagen, Øster Farimagsgade 5, DK-1353 Copenhagen K, Denmark (e-mail: )

2Department of Economics and SIPA, Columbia University (e-mail: )

3Department of Economics, University of Copenhagen, Øster Farimagsgade 5, DK-1353 Copenhagen K, Denmark (e-mail: )

Abstract

Using Danish administrative data, we estimate the impact of bequests on the level and inequality of wealth. We compare the distributions of wealth over time of people whose parent died and those whose parent did not. Bequests account for 26 percent of the average post-bequest wealth 1-3 years after parental death and significantly affect wealth throughout the distribution. Bequests increase absolute wealth inequality (variance of the distribution censored at the top/bottom 1% increases by 33 percent), but reduce relative inequality (the top 1% share declines by 6 percentage points from the base of 31 percent).