Journal of Economic Perspectives: Vol. 8 No. 4 (Fall 1994)


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Intergenerational Transfers and the Accumulation of Wealth

Article Citation

Gale, William G., and John Karl Scholz. 1994. "Intergenerational Transfers and the Accumulation of Wealth." Journal of Economic Perspectives, 8(4): 145-160.

DOI: 10.1257/jep.8.4.145


This paper uses household data to provide direct estimates of intergenerational transfers as a source of wealth. The authors distinguish between intended transfers (for example, gifts to other households) and possibly unintended transfers (bequests) and estimate that intended transfers account for at least 20 percent of net worth. Thus, a significant portion of the U.S. wealth cannot be explained by the life-cycle model, even when the model is augmented to allow for bequests. Estimated bequests can account for an additional 31 percent of net worth. The authors also show that transfers among living people are about half as large as bequests.

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Gale, William G. (Brookings Institution)
Scholz, John Karl (LaFollette Institute of Public Affairs, U WI, Madison)

JEL Classifications

D91: Intertemporal Consumer Choice; Life Cycle Models and Saving
D31: Personal Income, Wealth, and Their Distributions


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