Graduation Year
2020
Date of Submission
10-2020
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics
Reader 1
Laura Grant
Terms of Use & License Information
Abstract
This paper describes the correlations between intergenerational wealth transfers, or IWTs, and income of households in bankruptcy as existing research does not address any linkage between the two events. The effect that inheritances, trust payments, and lump sum gifts have on personal finances will impact the millions of Americans who will receive such transfers during the “Great Wealth Transfer” of the coming decades. I use bankruptcy data from the Federal Judicial Center’s Integrated Database, or IDB, and income data from the University of Michigan’s Panel Survey of Income Dynamics, or PSID, to produce a dataset that contains average IWT values of bankrupt households by income level per state, per year, from 2008-2016. Through basic ordinary least squares analysis, I find that inheritance, trust payment, and lump sum receipt do not consistently correlate with income but that the age of the head of the household positively correlates with income. I conclude that further research should be conducted in order to create an empirical model that predicts one’s probability of declaring bankruptcy after receiving an IWT. This research could then be used to inform taxation policy based on the financial health outcomes of the recipient.
Recommended Citation
Kahn, Benjamin D., "Inheritance and Financial Health: The Correlation Between Intergenerational Wealth Transfers and Income Levels of Personal Bankruptcies" (2020). CMC Senior Theses. 2519.
https://scholarship.claremont.edu/cmc_theses/2519
