Tuesday 7 December 2021

Inheritance reduces inequality

According to a new report on inheritance in Australia released by the Productivity Commission, contrary to popular perception, the transfer of wealth via inheritance actually helps reduce inequality. This is because despite the absolute amount of inheritances and gifts being higher for the wealthy, the impact of receiving an inheritance is much greater for less wealthy recipients. Measured as a percentage of the wealth already owned, the poorest 20% of recipients of gifts and inheritances got a wealth boost about 50 times larger than the impact of gifts and inheritances on the wealthiest 20%.

Of course this effect is limited to those families wealthy enough for a bequest to exist in the first place - the poorest cohort of society are unlikely to receive any inheritance as their parents are likely to die without any significant estate to pass on.

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