Rebecca Chin and Lawson Ashburner, Productivity Commission - Wealth Transfers and their Economic Effects

Title: Wealth Transfers and their Economic Effects

Abstract: Wealth transfers are large and growing — over $120 billion was passed on in 2018, more than double that in 2002. Inheritances in particular, which account for around 90 per cent of all transfers, have increased steadily in line with the growing wealth of older Australians. In 2018-19 the value of the average inheritance was $125 000 compared to $8000 for gifts. Conventional wisdom suggests that wealth transfers make the richest Australians even better off. And in fact, wealthier Australians do receive larger transfers on average. But by the time people receive an inheritance, they will be well into middle age — about 50 years old on average — already established in their careers and housing, and many will potentially be nearing retirement themselves. So while inheritances weigh on economic mobility — by increasing the likelihood that wealthy parents have wealthy children — the effect is moderated by the lateness in life at which they are received.

Paper: Commission research paper and media release

Presenters: Rebecca Chin and Lawson Ashburner, Productivity Commission

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