Why Do Wealthy Parents Have Wealthy Children?

We show that family background matters significantly for children's accumulation of wealth and investor behavior as adults, even when removing the genetic connection between children and the parents raising them. The analysis is made possible by linking Korean-born children who were adopted at infancy by Norwegian parents to a population panel data set with detailed information on wealth and socioeconomic characteristics. The mechanism by which these Korean-Norwegian adoptees were assigned to adoptive families is known and effectively random. This mechanism allows us to estimate the causal effects from an adoptee being raised in one type of family versus another.

Automated summary

This study shows that family background significantly influences children's accumulation of wealth and investment behavior as adults, even when the genetic connection between children and their parents is removed. Adoptees from Korea raised by Norwegian parents were used in the analysis, allowing for estimates of causal effects from being raised in different types of families.