Chapter 7: Intergenerational persistence of wealth

Abstract

Evidence from intergenerational correlations and sibling correlations shows that intergenerational persistence in wealth is substantially large and similar in size compared to income persistence. The intergenerational persistence in wealth is partly due to the direct transfers of wealth from parents to children, which makes wealth unique compared to other resources such as education and income. Furthermore, indirect processes of reproduction affecting investment in human capital, financial literacy, access to networks, and investment behavior contribute to intergenerational persistence. Demographic conditions, especially household formation, fertility, and mortality, are important for the persistence of wealth but remain underresearched. Evidence suggests that the intergenerational persistence in wealth is higher for men than women, and more research is needed to confirm the processes driving these gender differences.