Poor Little Rich Kids? The Determinants of the Intergenerational Transmission of Wealth

Events

Causal Inference in Education Research Seminar (CIERS)

Poor Little Rich Kids? The Determinants of the Intergenerational Transmission of Wealth

Sandra E. Black, Audre and Bernard Rapoport Centennial Chair in Economics and Public Policy, University of Texas at Austin

WHEN:
Wednesday, April 11, 2018 8:30 am to 10:00 am
Location: 
Weill Hall, Room 3240

Open to PhD students and faculty engaged in causal inference in education policy research

Working paper co-authors include Paul J. Devereux, Petter Lundborg and Kaveh Majlesi

 

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 rolefor pre-birth factors. When bequests are taken into account, the role of adoptive parental wealth becomes much stronger. We find no evidence that education or earnings of parents are important drivers of the intergenerational wealth relationship between children and their adoptive parents and a limited role for child earnings, education, savings rates, and asset allocation in mediating the relationship. Indeed, savings rates are lower for children of wealthier 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. We also study consumption as an alternative measure of welfare and find both biological and environmental effects. However, the intergenerational consumption relationships largely disappear once we control for education, earnings, and wealth of parents and children. 

 

 About the speaker: Sandra E. Black holds the Audre and Bernard Rapoport Centennial Chair in Economics and Public Affairs and is a Professor of Economics. She received her B.A. from UC Berkeley and her Ph.D. in Economics from Harvard University. Since that time, she worked as an Economist at the Federal Reserve Bank of New York, and an Assistant, Associate, and ultimately Professor in the Department of Economics at UCLA before arriving at the University of Texas, Austin in 2010. She is currently a Research Associate at the National Bureau of Economic Research (NBER), a Research Affiliate at IZA, and a Nonresident Senior Fellow at Brookings Institution. She served as a Member of Obama's Council of Economic Advisers from August 2015-January 2017. Her research focuses on the role of early life experiences on the long-run outcomes of children, as well as issues of gender and discrimination.

 

 About CIERS: The objective of the Causal Inference in Education Research Seminar (CIERS) is to engage students and faculty from across the university in conversations around education research using various research methodologies. This seminar provides a space for doctoral students and faculty from social science disciplines to discuss current research and receive feedback on works-in-progress. Discourse across schools and departments creates a more complete community of education scholars, and provides a networking opportunity for students enrolled in a variety of academic programs who share common research interests. Our regular meeting schedule is Wednesday mornings from 8:30 to 10 am in Weill 3240. Check out our website to learn more and to sign up for the mailing list.

Hosted By

Education Policy Initiative (EPI)