Wealth and inheritance in Britain from 1896 to the present

Personal wealth has grown since the 1970s twice as fast in real terms as national income. Has this rise in the wealth-income ratio led to a corresponding increase in the wealth being passed on from one generation to the next? Are we returning to the levels of inheritance found in the 19th century? The aim of this paper is to construct UK evidence on the extent of the transmission of wealth in the form of estates and gifts inter vivos. It takes a long-run view of inheritance, starting from 1896, when the modern Estate Duty was introduced, and exploits the extensive estate data published over the years. Construction of a long-run time series for more than a century is challenging, and there are important limitations. The resulting time-series demonstrates the major importance of inheritance in the UK before the First World War, when the total transmitted wealth represented some 20 per cent of net national income. In the inter-war period, the total was around 15 per cent, falling to some 10 per cent after the Second World War, and then falling further to below 5 per cent in the late 1970s. Since then, there has indeed been an upturn: a rise from 4.8 per cent in 1977 to 8.2 per cent in 2006. This increase was more or less in line with the increase in personal wealth, and has to be interpreted in the light of the changing net worth of the corporate and public sectors of the economy.     

Banking crises in the US: the response of top income shares in a historical perspective

This paper examines the response of income concentration in the US to the occurrence of major systemic banking crises since the beginning of the twentieth century. In doing so, the paper analyzes the shape of the upper income tail as well as the national income shares accruing to different groups within the richest decile. The findings suggest that systemic banking crises reduce income concentration within the top decile of the US pre–tax and transfers income distribution, and more generally, that the effect is highly heterogeneous across different top income groups. While the richest income group loses ground, the lower half of the top decile appears to gain in relative terms. However, evidence suggests that the estimated short-term effect of market forces stemming from banking crises can be relatively small in magnitude and even temporary in nature, as it may be quickly reabsorbed. These findings lend indirect support to the idea that only substantial changes in government policies and institutional frameworks can bring about radical changes in income distribution.     

Emerging wealth disparities after the storm: Evidence from Spain

We examine how the recession that started in December 2007 in the United States impacted wealth accumulation and inequality among Spanish households. We find that overall wealth dropped by 15 percent between 2008 and 2011, with losses concentrating among households in the mid and top wealth quintiles. The most hard hit wealth components were business assets, primary home equity, and durable assets, which declined by 40 percent, 23 percent and 19 percent, respectively. Wealth losses among all households were likely sustained by restricted access to credit. Nonetheless, in part due to their more diversified wealth portfolios, households in the top wealth quintile amassed a greater share of the country’s wealth during the recession. Consequently, wealth inequality, which receded during the expansionary years of 2002 through 2005, rose by 2008 and continued its trend in 2011.     

From classes to copulas: wages,capital, and top incomes

Public debates about the rise in top income shares often focus on the growing dispersion in earnings, and the soaring pay for top executives and financial-sector employees. But can the change in the marginal distribution of earnings on its own explain the rise in top income shares? Are top executives replacing capital owners in the group of top-income earners, or are we rather witnessing a fusion of top capital and top earnings? This paper proposes an extension of the copula framework and uses it for exploring the changing composition of top incomes. It illustrates that changes in top income shares can easily be decomposed into respective changes in the marginal distributions of labour and capital income and the changing association between the two types of income. An application using tax record data from Norway shows that the association between top labour and capital incomes grew stronger between 1995 and 2005 in the top half of the wage and capital income distribution, though it declined for the top 1% of capital income receivers. A gender decomposition demonstrates that the association of wage and capital incomes at the top is particularly striking for men, whilst women are largely under-represented in the top halves of the two marginal distributions.     

The effects of separate taxation on labor participation of married couples. An empirical analysis using propensity score

Up to 1987 the Spanish Income Tax imposed compulsory joint filing for married couples. However, the 1988 reform allowed spouses to choose between joint and separate taxation, involving a reduction in tax rates for secondary earners. Our aim is to analyze this reform as a quasi-natural experiment, assessing the effects of tax changes on labor participation. To find out the causal effect we adopt the difference-in-differences technique. We use data from the ‘Spanish Income Tax Panel 1982–1998’. Our results show that, as a consequence of differential tax changes, married women in families more strongly affected by the fiscal reform increase their labor participation more than secondary earners from families less affected by the reform. The participation rate for secondary earners in the treatment group increases by 9.4 percentage points whereas the control group increases their participation rate by 7.8 percentage points. We define the treatment group as those secondary earners in relatively low-income families in year 1987 and the control group as those in middle-high income families, because the former experiences a stronger reduction in tax rates than the latter. As a result, we can attribute the 1.6-percentage-point-increase in participation rates to the 1988 income tax reform.     

How to measure and proxy permanent income: evidence from Germany and the U.S.

Permanent income (PI) is an enduring concept in the social sciences and is highly relevant to the study of inequality. Nevertheless, there has been insufficient progress in measuring PI. We calculate a novel measure of PI with the German Socio-Economic Panel (SOEP) and U.S. Panel Study of Income Dynamics (PSID). Advancing beyond prior approaches, we define PI as the logged average of 20+ years of post-tax and post-transfer (“post-fisc”) real equivalized household income. We then assess how well various household- and individual-based measures of economic resources proxy PI. In both datasets, post-fisc household income is the best proxy. One random year of post-fisc household income explains about half of the variation in PI, and 2–5 years explain the vast majority of the variation. One year of post-fisc HH income even predicts PI better than 20+ years of individual labor market earnings or long-term net worth. By contrast, earnings, wealth, occupation, and class are weaker and less cross-nationally reliable proxies for PI. We also present strategies for proxying PI when HH post-fisc income data are unavailable, and show how post-fisc HH income proxies PI over the life cycle. In sum, we develop a novel approach to PI, systematically assess proxies for PI, and inform the measurement of economic resources more generally.     

Effects of physical,virtual reality-based,and brain exercise on physical,cognition, and preference in older persons: a randomized controlled trial

Background

Physical exercise (PE), virtual reality-based exercise (VRE), and brain exercise (BE) can influence physical and cognitive conditions in older persons. However, it is not known which of the three types of exercises provide the best effects on physical and cognitive status, and which exercise is preferred by older persons. This study compared the effects of PE, VRE, and BE on balance, muscle strength, cognition, and fall concern. In addition, exercise effort perception and contentment in older persons was evaluated.

Methods

Eighty-four older persons (n?=?84) were randomly selected for PE, VRE, BE, and control groups. The exercise groups received 8-week training, whereas the control group did not. Balance was assessed by Berg Balance Scale (BBS) and Timed Up and Go test (TUG), muscle strength by 5 Times Sit to Stand (5TSTS) and left and right hand grip strength (HGS), cognition by Montreal Cognitive Assessment (MoCA) and Timed Up and Go test Cognition (TUG-cog), fall concern by Fall Efficacy Scale International (FES-I), exercise effort perception by Borg category ratio scale (Borg CR-10), and exercise contentment by a questionnaire.

Results

After exercise, PE significantly enhanced TUG and 5TSTS to a greater extent than VRE (TUG; p?=?0.004, 5TSTS; p?=?0.027) and BE (TUG; p?=?0,012, 5TSTS; p?<?0.001). VRE significantly improved MoCA (p?<?0.001) and FES-I (p?=?0.036) compared to PE, and 5TSTS (p?<?0.001) and FES-I (p?=?0.011) were improved relative to BE. MoCA was significantly enhanced by BE compared to PE (p?<?0.001) and both MoCA and TUG-cog were improved compared to VRE (p?=?0.04). PE and VRE significantly (p < 0.001) increased Borg CR-10 in all exercise sessions, whereas BE showed a significant improvement (p?< 0.001) in the first 4 sessions. Participants had a significantly greater satisfaction with BE than controls (p?=?0.006), and enjoyed VRE and BE more than PE (p?< 0.001). Subjects in all exercise groups exhibited benefits compared to the control group (p?< 0.001).

Conclusions

PE provided the best results in physical tests, VRE produced measurable improvements in physical and cognition scores, while BE enhanced cognition ability in older persons. Older persons preferred VRE and BE compared to PE. Both exercises are suggested to older persons to improve physical and cognitive conditions.

     

Tracking of sport and exercise types from midlife to old age: a 20-year cohort study of British men

Background

Previous physical activity (PA) tracking studies have examined the stability of overall PA and/or PA types, but few have investigated how specific types of sport/exercise track over the life course. The aim of this study was to determine how specific sports/exercises in midlife track and predict future sport/exercise and PA in men transitioning to old age.

Methods

Seven thousand seven hundred thirty-five men (aged 40–59?years) recruited in 1978–80 were followed up after 12, 16 and 20?years. At each wave men self-reported participation in sport/exercise. Frequent sport/exercise participants (>?1/month) reported the types of sport/exercise they engaged in. Men also reported total PA, health status, lifestyle behaviours and socio-demographic characteristics. Stability of each sport/exercise was assessed using kappa statistics and intraclass correlation coefficients. Logistic regression estimated the odds of participating in sport/exercise and being active at 20-year follow up according to specific types of sport/exercise in midlife.

Results

Three thousand three hundred eighty-four men with complete data at all waves were included in analyses. Tracking of specific sports/exercises ranged from fair to substantial, with golf being the most common and most stable. Bowls was the most frequently adopted. Odds of participating in sport/exercise and being active in old age varied according to sport/exercise types in midlife. Golf and bowls in midlife were the strongest predictors of sport/exercise participation in old age. Golf, cricket and running/jogging in midlife were among the strongest predictors of being active in old age. Compared to participating in just one sport/exercise in midlife, sampling multiple sports/exercises was more strongly associated with sport/exercise participation and being active in old age.

Conclusion

The stability of sport/exercise participation from midlife to old age varies by type. Specific sports/exercises in midlife may be more likely to predict future PA than others. However, participating in a range of sports/exercises may be optimal for preserving PA into old age.

     

Influence of socioeconomic status on changes in body size and physical activity in ageing black South African women

Background

The increasing prevalence of obesity in sub-Saharan African women is not well understood, and black South African women in the region are particularly vulnerable. This study aimed to examine whether the relationship of socioeconomic status (SES) with changes in body mass index (BMI) and waist circumference (WC) is mediated by physical activity in ageing African women.

Methods

In a longitudinal analysis of the 518 caregivers associated with the Birth to Twenty Plus study, the role of SES associated with 10-year changes in BMI and WC was tested using structural equation modelling (SEM). The degree of mediation of moderate-vigorous physical activity (MVPA) and sitting time in this association was also assessed.

Results

The prevalence of obesity increased significantly from baseline to follow-up (p?<?0.0001). In the SEM models, baseline SES had a direct positive effect on changes in BMI (β, 95% CI, 0.02 (0.005 to 0.04), and a direct negative effect on changes in MVPA (β, 95% CI, ??3.81 (??6.92 to ??0.70). Baseline MVPA had a direct negative effect (β, 95% CI, ??0.002 (??0.003 to ??0.0003) and indirect positive effect via change in MVPA (β, 95% CI, 0.01 (0.0001 to 0.001) on change in WC.

Conclusions

Our study demonstrates the role and interaction of sociodemographic and behavioural predictors of obesity, and suggests a multifaceted approach to management of the crisis in communities of ageing urban African women.