Central Bank study weighs in to debate on inheritance and wealth in Ireland with some unexpected findings
The study, conducted in the second half of 2020, found that households which had received inheritances or gifts were “substantially wealthier” than those that did not. Their median income was typically 17 per cent higher while their net wealth was 155 per cent higher.
The study found that inherited wealth represented a greater share of total net wealth for households in the middle of the wealth distribution curve than for the wealthiest households. The wealth equation is hard one to disentangle, however. We know that approximately 40 per cent of first-time buyers are being gifted money to help them build a deposit to buy a home. If housing is the chief driver of wealth, that would seem to link these gifts to inequality. Nonetheless, the Central Bank’s study concludes otherwise.
“There is evidence that human capital transfers across generations are persistent and that family environment is also important for these transfers,” they say. In other words, if your parents are better educated, if they are well connected, if they offer their children jobs in the family company that unsurprisingly translates into better wealth outcomes for their offspring. We’ve no way of measuring this type of transfer.
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