Does a Wealth Tax Improve Equality of Opportunity? Evidence from Norway

Author/Editor:

Kristoffer Berg ; Shafik Hebous

Publication Date:

March 19, 2021

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Does parental wealth inequality impact next generation labor income inequality? And does a tax on parental wealth affect the labor income distribution of the next generation? We tackle both questions empirically using detailed intergenerational data from Norway, focusing on effects on wages rather than capital income. Results suggest that a net wealth of NOK 1 million increases wages of the children by NOK 14,000. Children of wealthy parents also have a higher labor income mobility. The estimated hypothetical wage distribution without the wealth tax is more unequal. Moreover, suggestive evidence indicates parental wealth is associated with higher labor risk taking.

Series:

Working Paper No. 2021/085

Frequency:

regular

English

Publication Date:

March 19, 2021

ISBN/ISSN:

9781513574417/1018-5941

Stock No:

WPIEA2021085

Format:

Paper

Pages:

30

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