Wealth and Income Inequality Early in Life: Underage Children as Owners of Privately Held Firms

Using unique administrative data that link privately held firm owners to rich background information, we provide novel evidence on underage children as firm owners. Ownership occurs at all ages 0--17, with a mean age of 12. Childhood ownership is strongly concentrated among high-income families, creates substantial early-life income flows and exacerbates intergenerational inequality. Firm-owning children have in their childhood average incomes which would place them in the fourth decile of the adult income distribution and which imply wealth holdings at the seventh wealth decile. At age 30, child owners are substantially overrepresented in their cohort’s top 1%.