DP7701 Estate Taxation and Intergenerational Transfers

Author(s): Tullio Jappelli , Mario Padula , Giovanni Pica

Publication Date: February 2010

Keyword(s): Bequests , Estate and inheritance taxes , Intergenerational mobility

JEL(s): E21 , H24

Programme Areas: International Macroeconomics

Link to this Page: www.cepr.org/pubs/dps/DP7701.asp.asp

We estimate the effect of estate taxation on bequests exploiting a sequence of Italian reforms that culminated with the reduction of estate taxes in 1999 and their abolishment in 2001. To perform our exercise, we use the 1993-2006 Survey of Household Income and Wealth, which has data on real estate transfers and information on potential donors as well as recipients. Our sample includes data on 34,885 owners of real estate wealth and 120,686 potential donors. Differences-in-differences estimates indicate that the abolition of estate taxes has increased the propensity to transfer real estate wealth by about 2 percentage points, and square meter transferred by about 4 points.