【PDRC Research Series on JHPS Second Generation Supplement】
Intergenerational Correlation of Household Wealth: Evidence from the JHPS Second Generation Supplement
This paper investigates the intergenerational correlation of household wealth and its determinants using the Japan Household Panel Survey (JHPS) and its Second Generation Supplement (JHPS-G2). Our empirical findings are summarized as follows: (1) the marginal effect of parental financial wealth on their children's wealth is about 0.10 to 0.13, (2) the intergenerational correlation of household wealth is partly, albeit to a lesser extent than previous findings, determined by children's education and income, and (3) the impact of parental wealth on homeownership among children is largely explained by direct wealth transfers across generations. The paper also investigates the relationship between future inheritance/gifts and the economic status of the child generation, showing that (1) future inheritance/gifts of financial wealth is largely unrelated to the economic status of the child generation, and (2) future inheritance/gifts of housing is negatively correlated with the economic status of the child generation.