ESRI Discussion Paper Series No.347
The Effect of Inheritance Receipt on Individual Labor Supply: Evidence from Japanese Microdata

Takeshi Niizeki
Visiting Fellow, Economic and Social Research Institute, Cabinet Office, Japan
Lecturer, Faculty of Law and Letters, Ehime University
Masahiro Hori
Senior Research Fellow, Economic and Social Research Institute, Cabinet Office, Japan

Abstract

This paper examines the effects of wealth on individual labor supply by considering inheritance receipts as an exogenous change in household wealth. Using Japanese microdata consisting of individuals aged 26–51, we find that (i) while men’s probability of working does not respond to inheritance receipt, women’s probability of working decreases; and (ii) in the case of most respondents the receipt of an inheritance seems to be unanticipated. We also test the unitary household model using information on respondents’ spouses. The results indicate that who received an inheritance influences the labor supply decision of each household member, meaning that we find no support for the unitary model.


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  2. page1
    Abstract
  3. page2
    1. Introduction
  4. page5
    2. Data
  5. page6
    3. Empirical strategy and results
    1. page6
      3.1 Benchmark case
    2. page9
      3.2.The role of anticipating the parent’s death
    3. page10
      3.3 Unitary model
  6. page12
    4. Conclusion
  7. page14
    References
  8. page17
    Tables
    1. page17
      Table 1: Descriptive statistics of observations in our sample
    2. page18
      Table 2: Effect of inheritance receipt on employment
    3. page19
      Table 3: Effect of inheritance amount on employment
    4. page20
      Table 4: Effect of inheritance receipt or amount on employment (Cross analysis vs. vertical analysis)
  9. page21
    Figures
    1. page21
      Figure 1(a): Age profile of employment rate by birth-year cohort (Men)
    2. page21
      Figure 1(b): Age profile of employment rate by birth-year cohort (Women)
    3. page22
      Figure 2(a): Estimates of β2 for 9-year window (Men)
    4. page22
      Figure 2(b): Estimates of β2 for 9-year window (Women)
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