The intergenerational transmission of wealth

Abstract

This chapter explores the significance of wealth as a key element of social stratification in contemporary societies. They are characterized by substantial inequality where a small portion of the population holds a disproportionate share of total wealth. The origin of wealth is primarily attributed to intergenerational transfers or personal savings over one's lifetime, yet the degree to which each contributes to overall wealth remains a subject of scholarly debate. Studies indicate significant intergenerational wealth persistence, particularly among the affluent, suggesting that being born into wealth strongly predicts adult affluence. This perpetuation of wealth across generations is likely driven by dynastic aspirations among the wealthiest, who view inherited wealth as a lineage asset. However, there is also notable mobility into elite circles through self-made wealth. The impact of inheritances on wealth inequality is complex, potentially reducing disparities by reducing recipients' workforce participation but also fostering greater investment acumen. Wealth additionally exerts indirect effects on educational, occupational, and marital outcomes, with more wealth generally correlating with better life outcomes in these areas. The study underscores the need for robust wealth data to comprehensively analyze these dynamics and their repercussions on broader societal equality and opportunity.