Born with a Silver Spoon? Danish Evidence on Wealth Inequality in Childhood

Abstract

We use Danish wealth records from three decades to characterise wealth inequality in childhood, where the main source of wealth is transfers. Wealth holdings are small in childhood but they have strong predictive power for future wealth in adulthood. At age 18, asset holdings of children are more informative than parental wealth in predicting wealth of children when they are in their 40s. We investigate why and rule out that childhood wealth in itself can accumulate enough to explain later wealth inequality. Instead, childhood wealth seems to proxy for intergenerational correlation in savings behaviour and additional transfers from parents.