Abstract
Inheritances matter for wealth accumulation and are often central to policy debates on wealth taxes. Using household level survey data, this paper shows that up to 2020 over one-third of households in Ireland had inherited wealth, the cumulative value of which (€97 billion) accounts for approximately one sixth of current net wealth for these households. However, the impact of inheritance extends beyond its direct value as inheritors tend to be wealthier, with a greater ownership of property. Our analysis shows that inheritances in Ireland contribute little to wealth inequality, and may even have reduced it over time, in line with existing findings for Britain and the United States. Tentative evidence suggests that mechanisms behind this wealth equalising effect may be (i) the importance of inheritances for the acquisition of property assets for middle-wealth households, (ii) the rise of asset prices, especially house prices, and (iii) substitution from employee income to rental income among inheritors.
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Open Access funding provided by the IReL Consortium. Arrigoni acknowledges financial support from the Trinity Research in Social Sciences (€700 TRiSS Travel Bursary awarded to present this paper at the 10th ECINEQ Meeting in July 2023).
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Simone Arrigoni and Laura Boyd prepared the dataset. Simone Arrigoni and Tara McIndoe-Calder ran the analysis and wrote the main manuscript text. Simone Arrigoni prepared all figures and tables. All authors reviewed the manuscript.
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The views expressed are those of the authors and do not necessarily reflect those of the Central Bank of Ireland or the European System of Central Banks (ESCB). We would like to thank the CSO ICW team for granular data access. We are grateful to the Editor Daniel Waldenström, an anonymous referee, Daragh Clancy, Thomas Conefrey, Reamonn Lydon, Vasileios Madouros, Salvatore Morelli, Brian Nolan, Martin O’Brien, Gerard O’Reilly as well as conference participants at the 2022 HFCN Research Meeting, 2023 IPECE Workshop, 2023 Irish Economic Association Annual Conference, 2023 Meeting of the Society for the Study of Economic Inequality (ECINEQ), and seminar participants at the Central Bank of Ireland for useful comments. Arrigoni is a visiting researcher at the Central Bank of Ireland, while Boyd and McIndoe-Calder are employed by the Central Bank of Ireland. Arrigoni acknowledges financial support from Trinity Research in Social Sciences (TRiSS Travel Bursary).
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Arrigoni, S., Boyd, L. & McIndoe-Calder, T. The long and the short of it: inheritance and wealth in Ireland. J Econ Inequal (2024). https://doi.org/10.1007/s10888-024-09638-5
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DOI: https://doi.org/10.1007/s10888-024-09638-5