Children who are born with wealth are becoming increasingly rich; research shows

The amount of wealth a parent has is increasingly becoming a factor in their children’s wealth. The Netherlands Bureau for Economic Policy Analysis (CPB) reached this conclusion after they conducted research into the matter. An important government advisor has warned that this can lead to unequal opportunities for children.

The CPB compared the wealth of parents and children from 2006 to 2022. This showed that children whose parents are amongst the most wealthy also end up gaining wealth, while children of parents with the lowest assets make less progress and have more difficulty climbing the ladder in terms of how much money and possessions they have.

Due to increased general prosperity, children today are, in most cases, better off than their parents were at the same age. But there are notable differences. Children of parents who are among the one percent richest people in the country are among the top 20 percent richest people in the country by their 40th birthday on average. Children of parents from the top 0.01 percent are even among the richest 4 percent.

Why this is happening is not completely clear. One of the reasons mentioned is that rich parents may have been more likely to buy extra tutoring for their child so that they can follow a higher education, said CPB researcher Arjan Lejour.

The research specifically looked at how wealthy the children were at 40 years old. In most cases, at least one of their parents is still in their lives at this time, so inheritances do not play a role yet. However, parents may have already given their offspring some support through gifts.

Lejour said that there are various measures that can be taken to give children more equal opportunities. One of the measures would be for there to be more lessons in business in school. Offering free tutoring or raising the transfer tax on money transfers would also be worth considering.

Earlier research by the CPB pointed out that business owners have become richer in the last decade than people who work as employers.