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The Effect of Inheritance Receipt on Retirement

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  • Jeffrey R. Brown

    (University of Illinois at Urbana-Champaign and NBER)

  • Courtney C. Coile

    (Wellesley College and NBER)

  • Scott J. Weisbenner

    (University of Illinois at Urbana-Champaign and NBER)

Abstract

This paper provides new evidence on how wealth shocks influence retirement behavior. Economic theory generally posits that leisure is a normal good, yet it is difficult to obtain reliable empirical estimates of the wealth effect because wealth is correlated with numerous unobservable characteristics that affect labor supply. We use inheritance receipt as a wealth shock and find that it is associated with a significant increase in the probability of retirement, especially when the inheritance is unexpected. This evidence has important implications for how public policies, such as pension or tax reform, may influence retirement behavior through the wealth effect. © 2010 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 92 (2010)
Issue (Month): 2 (May)
Pages: 425-434

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Handle: RePEc:tpr:restat:v:92:y:2010:i:2:p:425-434

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References

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Citations

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Cited by:
  1. Hui Shan, 2008. "Property taxes and elderly labor supply," Finance and Economics Discussion Series 2008-51, Board of Governors of the Federal Reserve System (U.S.).
  2. Stephanie E. Curcuru & Tomas Dvorak & Francis Warnock, 2007. "Cross-border returns differentials," Globalization and Monetary Policy Institute Working Paper 04, Federal Reserve Bank of Dallas.
  3. Lorenzo Burlon & Montserrat Vilalta-Bufí, 2014. "Technical progress, retraining cost and early retirement," Temi di discussione (Economic working papers) 963, Bank of Italy, Economic Research and International Relations Area.
  4. Luigi, Cannnari & Giovanni, D'Alessio, 2008. "Intergenerational Transfers in Italy," MPRA Paper 15111, University Library of Munich, Germany.
  5. repec:dgr:uvatin:2010067 is not listed on IDEAS
  6. Gopi Shah Goda & John B. Shoven & Sita Nataraj Slavov, 2012. "Does Stock Market Performance Influence Retirement Intentions?," Journal of Human Resources, University of Wisconsin Press, vol. 47(4), pages 1055-1081.
  7. Stefan Hochguertel, 2010. "Self-Employment around Retirement Age," Tinbergen Institute Discussion Papers 10-067/3, Tinbergen Institute.
  8. Crawford, Rowena, 2013. "The effect of the financial crisis on the retirement plans of older workers in England," Economics Letters, Elsevier, vol. 121(2), pages 156-159.
  9. Richard Disney & John Gathergood, 2013. "House Prices, Wealth Effects and Labour Supply," Discussion Papers 13/02, University of Nottingham, School of Economics.
  10. Voňková, Hana & van Soest, Arthur, 2009. "How Sensitive Are Retirement Decisions to Financial Incentives: A Stated Preference Analysis," IZA Discussion Papers 4505, Institute for the Study of Labor (IZA).
  11. Stephanie E. Curcuru & Tomas Dvorak & Francis E. Warnock, 2007. "The Stability of Large External Imbalances: The Role of Returns Differentials," NBER Working Papers 13074, National Bureau of Economic Research, Inc.

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