Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/260159 
Year of Publication: 
2015
Series/Report no.: 
Working Paper No. 2015:21
Publisher: 
Lund University, School of Economics and Management, Department of Economics, Lund
Abstract: 
Wealth is highly correlated between parents and their children; however, little is known about the extent to which these relationships are genetic or determined by environmental factors. We use administrative data on the net wealth of a large sample of Swedish adoptees merged with similar information for their biological and adoptive parents. Comparing the relationship between the wealth of adopted and biological parents and that of the adopted child, we find that, even prior to any inheritance, there is a substantial role for environment and a much smaller role for pre-birth factors. We also examine the role played by bequests and find that, when they are taken into account, the role of adoptive parental wealth becomes much stronger. We find very little evidence that education or earnings of parents or children are important drivers of the intergenerational wealth relationship between children and their adoptive parents. Our findings suggest that wealth transmission is not primarily because children from wealthier families are inherently more talented or more able but that, even in relatively egalitarian Sweden, wealth begets wealth.
Subjects: 
intergenerational mobility
nature versus nurture
portfolio allocation
JEL: 
G11
J01
J13
J62
Document Type: 
Working Paper

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