Share of inheritance and gift in aggregate wealth in Korea

This study estimates the share of inheritance and gift in aggregate wealth in Korea. Assuming the capital income share of 30% and using long-term (20, 10, and 5-year) averages of the ratio of inheritance and gift flows to national income and saving rates, the share of inheritance and gift is estimated to be 37~38%. If the statistics for 2019 alone, which is the latest year that the data are available, are used, the estimate becomes 45%. In contrast, the estimate from National Survey of Tax and Benefit (NaSTaB), which is a household survey, is only 13~14%. Inheritance and gift flow estimated from NaSTaB is only about 30% of that from the official tax data and the gap is consistent with the gap in cumulated amounts. So the results imply the need for caution when we use household survey data for inheritance and gift. The estimate from this study (37~38%) is lower than the estimates for US and European countries (50~60%) from other studies. Korea has a shorter period of economic development and baby-boomers with significant wealth are beginning to retire. So the share of inheritance and gift is expected to rise in the future.