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The Effect of Inheritance Receipt on Retirement

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  • Jeffrey R. Brown
  • Courtney C. Coile
  • Scott J. Weisbenner

Abstract

This paper uses the receipt of an inheritance to measure the effect of wealth shocks on retirement. Using the Health and Retirement Study (HRS), we first document that inheritance receipt is common among older workers %u2013 one in five households receives an inheritance over an eight-year period, with a median value of about $30,000. We find that inheritance receipt is associated with a significant increase in the probability of retirement. In particular, we find that receiving an inheritance increases the probability of retiring earlier than expected by 4.4 percentage points, or 12 percent relative to the baseline retirement rate, over an eight-year period. Importantly, this effect is stronger when the inheritance is unexpected and thus more likely to represent an exogenous shock to wealth.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12386.

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Date of creation: Jul 2006
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Publication status: published as Jeffrey R Brown & Courtney C Coile & Scott J Weisbenner, 2010. "The Effect of Inheritance Receipt on Retirement," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 425-434, 08.
Handle: RePEc:nbr:nberwo:12386

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Citations

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Cited by:
  1. Richard Disney & John Gathergood, 2013. "House Prices, Wealth Effects and Labour Supply," Discussion Papers 13/02, University of Nottingham, School of Economics.
  2. Stephanie E. Curcuru & Tomas Dvorak & Francis Warnock, 2007. "Cross-border returns differentials," Globalization and Monetary Policy Institute Working Paper, Federal Reserve Bank of Dallas 04, Federal Reserve Bank of Dallas.
  3. 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.
  4. 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).
  5. Hui Shan, 2008. "Property taxes and elderly labor supply," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2008-51, Board of Governors of the Federal Reserve System (U.S.).
  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. Luigi, Cannnari & Giovanni, D'Alessio, 2008. "Intergenerational Transfers in Italy," MPRA Paper 15111, University Library of Munich, Germany.
  8. repec:dgr:uvatin:2010067 is not listed on IDEAS
  9. Lorenzo Burlon & Montserrat Vilalta-Bufí, 2014. "Technical progress, retraining cost and early retirement," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 963, Bank of Italy, Economic Research and International Relations Area.
  10. Crawford, Rowena, 2013. "The effect of the financial crisis on the retirement plans of older workers in England," Economics Letters, Elsevier, Elsevier, vol. 121(2), pages 156-159.
  11. Stefan Hochguertel, 2010. "Self-Employment around Retirement Age," Tinbergen Institute Discussion Papers 10-067/3, Tinbergen Institute.

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