Intergenerational Transfers, Aging, and Uncertainty
AbstractResearch on intergenerational transmission of wealth has pointed to uncertainty -- about the date of one's own death, for example -- as a potential source of significant bequest flows. In this paper I examine the effects of this same uncertainty on the behavior of those who expect to receive bequests. Potential heirs who are prudent will consume less than would be warranted by the size of their expected bequests, and so on average consumption will rise at the age when actual bequests are received. I examine the effect of this uncertainty on the outcome of population aging. Population aging, by changing the relative sizes of the bequeathing generation and those receiving bequests, raises the average size of bequests received and reduces the saving of the bequest-receiving generation. I show that accounting for the effects of uncertainty slows down the reduction in saving that results from population aging.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4477.
Date of creation: Sep 1993
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Publication status: published as Advances in the Economics of Aging, David A. Wise, ed., pp. 321-339, (Chicago: University of Chicago Press, 1996).
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Other versions of this item:
- David N. Weil, 1996. "Intergenerational Transfers, Aging, and Uncertainty," NBER Chapters, in: Advances in the Economics of Aging, pages 321-342 National Bureau of Economic Research, Inc.
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
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- Rowena A. Pecchenino & Patricia S. Pollard, 1995.
"The effects of annuities, bequests, and aging in an overlapping generations model of endogenous growth,"
Working Papers, Federal Reserve Bank of St. Louis
1995-008, Federal Reserve Bank of St. Louis.
- Pecchenino, Rowena A & Pollard, Patricia S, 1997. "The Effects of Annuities, Bequests, and Aging in an Overlapping Generations Model of Endogenous Growth," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 107(440), pages 26-46, January.
- David Joulfaian, 2006. "Inheritance and Saving," NBER Working Papers 12569, National Bureau of Economic Research, Inc.
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