How long do wealth shocks persist? Less than three generations in England, 1700-2025

Clark, Gregory and Cummins, Neil ORCID: 0000-0001-7328-2967 (2025) How long do wealth shocks persist? Less than three generations in England, 1700-2025. Economic History Working Papers (388). London School of Economics and Political Science, London, UK.

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Abstract

What happens across generations to random wealth shocks? Do they endure and even magnify, or do they dissipate? By implication, how much of modern wealth is attributable to events before 1900? This paper uses random shocks to family size in England before 1880, that created wealth shocks for the children, to measure the persistence of random wealth shocks. Fertility for married couples in England before 1880 was not controlled but was a biological lottery. And for richer families, family size strongly influenced child wealth. This paper finds that such biology induced wealth shocks had no impact on descendent wealth by three generations later. Since wealth itself persisted strongly across more than five generations this implies that, in the long run, wealth mainly derives from sources other than wealth inheritance itself. The observed link between nineteenth century wealth and modern wealth does not lie in wealth transmission itself. Instead, wealth persisted because of the inheritance within families of behaviours and abilities associated with wealth accumulation and wealth retention.

Item Type:	Monograph (Working Paper)
Official URL:	https://www.lse.ac.uk/Economic-History/Working-Pap...
Divisions:	Economic History
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HB Economic Theory
JEL classification:	D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions N - Economic History > N3 - Labor and Consumers, Demography, Education, Health, Income, and Wealth > N33 - Economic History: Labor and Consumers, Demography, Education, Health, Income and Wealth: Europe: Pre-1913 N - Economic History > N3 - Labor and Consumers, Demography, Education, Health, Income, and Wealth > N34 - Economic History: Labor and Consumers, Demography, Education, Health, Income and Wealth: Europe: 1913-
Date Deposited:	27 Oct 2025 11:18
Last Modified:	29 Oct 2025 09:21
URI:	http://eprints.lse.ac.uk/id/eprint/129982

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