Simulating Long-Run Wealth Distribution and Transmission: The Role of Intergenerational Transfers

This paper utilises the Italian Treasury DYnamic Microsimulation Model (T-DYMM) to project individual and household economic trends up to 2070, focusing on the intergenerational transmission of wealth inequality. To analyse the impact of intergenerational transfers on wealth inequality, various scenarios are compared to a baseline. The results suggest that net wealth inequality is expected to remain fairly stable until 2040, when it is expected to increase progressively, especially due to the rising size and inequality of intergenerational transfers. Demographic factors such as increased life expectancy and declining fertility are the main explanations for this phenomenon. Although certain assumptions, such as disregarding behavioural adjustments in response to tax changes, have their limitations, this study offers valuable insights into the potential impacts and timelines of inheritance tax reforms on long-term inequality transmission.