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

March 19, 2021

Preview Citation

Format: Chicago

Kristoffer Berg, and Shafik Hebous. Does a Wealth Tax Improve Equality of Opportunity? Evidence from Norway, (USA: International Monetary Fund, 2021) accessed December 21, 2024

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.

Subject: Capital income, Economic sectors, Financial crises, Income, Income distribution, Labor, National accounts, Taxes, Wages, Wealth tax

Keywords: Capital income, Counterfactual income distribution, Equality of Opportunity, Income, Income distribution, Income Mobility, Inequality, Labor income dispersion, Parental Wealth, Redistribution, Wages, Wealth Tax, Wealth tax tax rate

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/085
Stock No:

WPIEA2021085
ISBN:

9781513574417
ISSN:

1018-5941

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