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Estate Division: Equal Sharing as Choice, Social Norm, and Legal Requirement

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Abstract
The objective of this essay is to study to what extent parents divide their estates unequally between their children and the determinants of this decision. We use a new dataset based on the estate reports for almost 70,000 Swedish widows, widowers, divorcees and unmarried individuals who died with positive estates and at least two children. Unequal sharing is unusual; depending on definitions only 2–12 percent of the estates are unequally divided. Previous studies for other countries, particularly from the US, find that around 20–40 percent of parents divide their estates unequally. We argue that the relatively low frequency of unequal sharing in Sweden might be explained by contextual factors such as the inheritance law, the transfer tax system, the income distribution, and the welfare state. We also estimate models with family fixed effects to study how the characteristics of children to parents who choose unequal division affect the size of the transfer. The empirical estimates show that bequests are not used to compensate for income differences between children, suggesting that bequests are not guided by altruistic motives. Children who are likely to have provided services to the parent receive more than their siblings however. This suggests that, at least some bequests are guided by exchange motives.

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  • Erixson, Oscar & Ohlsson, Henry, 2014. "Estate Division: Equal Sharing as Choice, Social Norm, and Legal Requirement," Working Paper Series 1006, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:1006
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    Cited by:

    1. Francesconi, Marco & Pollak, Robert A. & Tabasso, Domenico, 2023. "Unequal bequests," European Economic Review, Elsevier, vol. 157(C).
    2. Petra Persson & Maya Rossin-Slater, 2018. "Family Ruptures, Stress, and the Mental Health of the Next Generation," American Economic Review, American Economic Association, vol. 108(4-5), pages 1214-1252, April.
    3. Frank Cowell & Dirk Van de gaer, 2017. "Condorcet was Wrong, Pareto was Right: Families, Inheritance and Inequality," STICERD - Public Economics Programme Discussion Papers 34, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    4. Oscar Erixson, 2017. "Health responses to a wealth shock: evidence from a Swedish tax reform," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(4), pages 1281-1336, October.
    5. Jeppe Druedahl & Alessandro Martinello, 2022. "Long-Run Saving Dynamics: Evidence from Unexpected Inheritances," The Review of Economics and Statistics, MIT Press, vol. 104(5), pages 1079-1095, December.
    6. Elinder, Mikael & Erixson, Oscar & Escobar, Sebastian & Ohlsson, Henry, 2014. "Estates, bequests, and inheritances in Sweden - A look into the Belinda databases," Working Paper Series, Center for Fiscal Studies 2014:14, Uppsala University, Department of Economics.
    7. Escobar, Sebastian & Ohlsson, Henry & Selin, Håkan, 2019. "Taxes, frictions and asset shifting: when Swedes disinherited themselves," Working Paper Series 2019:6, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    8. Erixson, Oscar & Escobar, Sebastian, 2020. "Deathbed tax planning," Journal of Public Economics, Elsevier, vol. 185(C).

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    More about this item

    Keywords

    Estate division; Wills; Equal sharing; Bequests motives; Iinheritances;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D10 - Microeconomics - - Household Behavior - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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