Magnus Eliasson Stubhaug, Department of Economics, UiO. "The causal effect of parental wealth on child wealth"
Department seminar. Magnus Eliasson Stubhaug is Doctoral Research Fellow at the Department of Economics, UiO. He will present the paper: The causal effect of parental wealth on child wealth.
Magnus Eliasson Stubhaug
This paper investigates what part of the intergenerational association in wealth is due to a causal effect of the wealth of parents on the future wealth of their children. The empirical analysis exploits mean-monotonicity assumptions to obtain informative bounds around mean potential child wealth at different levels of potential wealth of the parents. The results show that between 2 and 50 percent of the intergenerational association in wealth can be attributed to an average causal effect of parental wealth on child wealth. We further find that there is important heterogeneity in the causal effect of parental wealth. Increasing the wealth of parents has a large and statistically significant effect on child wealth in families that belong to the top 1% of the wealth distribution. The average causal effect of the same increase in parental wealth is much smaller for children that grew up in a family in the bottom 99 percent of the wealth distribution. Administrative data on gifts and inheritances show that the large causal effect in families at the top of the wealth distribution can only partly be explained by direct gifts and inheritances from parents to their children.