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Carnegie visits Nobel: Do inheritances affect labor and capital income?

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Author Info

  • Elinder, Mikael

    ()
    (Department of Economics)

  • Erixson, Oscar

    ()
    (Department of Economics)

  • Ohlsson, Henry

    ()
    (Department of Economics)

Abstract

The objective of this paper is to study when and how much labor supply and savings of heirs respond to inheritances. We estimate fixed effects models following direct heirs, inheriting in 2004, during the years 2000–2008 using Swedish panel data. Our first main result is that the more the heir inherits,the lower her labor income becomes. This labor supply effect appears in the years after the heir had inherited. We also find evidence of anticipation effects that occur before the actual transfer. Our second main result is that the more the heir inherits, the higher her capital income becomes. This savings effect only appears in the years after receiving the inheritance. It disappears after a couple of years.

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Bibliographic Info

Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number 2011:5.

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Length: 34 pages
Date of creation: 03 Mar 2011
Date of revision:
Publication status: Published as Elinder, Mikael, Oscar Erixson and Henry Ohlsson, 'Carnegie visits Nobel: Do inheritances affect labor and capital income?' in The impact of inheritances on heirs’ labor and capital income' in B.E. Journal of Economic Analysis & Policy, 2012.
Handle: RePEc:hhs:uunewp:2011_005

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Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
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Web page: http://www.nek.uu.se/
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Keywords: inheritances; bequests; windfall gains; labor supply; capital income; uncertainty;

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Cited by:
  1. Elinder Mikael & Erixson Oscar & Ohlsson Henry, 2012. "The Impact of Inheritances on Heirs' Labor and Capital Income," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-37, December.
  2. Wojciech Kopczuk, 2012. "Taxation of Intergenerational Transfers and Wealth," NBER Working Papers 18584, National Bureau of Economic Research, Inc.

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