Did modern growth kill inheritances?

There is a literature that tries to understand bequests, in particular whether they are accidental or voluntary. This is an important question as it has strong implications on savings motives, and thus on aggregate savings. With the development and sophistication of financial markets, one should see the accidental bequest to become less important. People can insure themselves against uncertain life times with annuities and life insurance, thus reducing the need to have excess savings in the case of unexpectedly long life. Voluntary bequests may go either way with development, depending on whether parents prefer to make inter-vivos transfers, which they can afford given the above.

Now all this is put into question after a great data digging initiative byThomas Piketty, who compiled bequest data for France from 1850 to 2008. He notices that while the size of bequests has decreased until the 1950s, this trend is now reversed. Concretely, as a fraction of national income, bequests amounted to 25% in the late 1800s, 5% in 1950 and 15% nowadays. Piketty measures this in two ways, once using wealth data and mortality tables, and once using actual bequests as recorded by fiscal authorities. The second measure is somewhat lower, as expected, but shows the same pattern through time.

The important question is now, what is the new incentive that would make households to leave larger bequests now (and even more in the future, as Piketty suggests)? The old argument of the new growth regime that came with Industrialization is clearly not valid. Piketty proposes that the difference between the rate of return and the growth rate mostly drives the aggregate size of inheritances. But there surely are also important microeconomic aspects, like the wealth distribution, borrowing constraints, the correlation of income between generations and subtleties of the tax code.