Intergenerational Transmission of Wealth and Life Satisfaction

Abstract

Previous literature has demonstrated that family wealth (or parental wealth) has a significant effect on the life satisfaction of children, but the exact mechanism behind this effect remains unknown. This study thus investigates the extent to which parental wealth can have an effect on the child’s life satisfaction through parental life satisfaction and the child’s wealth, using data from the Korean Labor and Income Panel Study. This study tries to extend existing knowledge of the effect of family background on the child’s life satisfaction, by linking two related phenomena known as intergenerational transmission of life satisfaction and intergenerational transmission of wealth. This study shows that parents’ net wealth has an effect on the child’s life satisfaction through two important mediating factors, specifically, their own life satisfaction and the child’s net wealth. This empirical evidence sheds light on the mechanism that links parental wealth and the child’s life satisfaction.