Built to Last: Intergenerational Transfers and the Architecture of Inequality

Abstract

This paper explores how altruistic motivations around bequests affect the distribution of wealth and consumption across generations. Using a two-period overlapping generations model with stochastic inheritance and distinct labor types, agents make decisions about consumption, savings, and bequests under CRRA utility. Altruism is modeled as a separate utility component, allowing the strength of intentional bequesting to vary across simulations. Simulation results show that altruism reduces within-group wealth inequality: both rich and poor agents exhibit tighter, less skewed wealth distributions. However, between-group inequality increases, as rich agents capture a larger share of total wealth. The net effect is a modest decline in overall wealth inequality, as measured by the Gini coefficient. Consumption inequality also falls slightly, driven by high-wealth agents reducing their consumption to leave larger bequests. Altruism amplifies the incentive to save rather than spend. Taken together, these findings show that altruism doesn’t uniformly reduce inequality, it redistributes it