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The Carnegie Conjecture: Some Empirical Evidence

Listed author(s):
  • Douglas Holtz-Eakin
  • David Joulfaian
  • Harvey S. Rosen

This paper examines tax-return-generated data on the labor force behavior of people before and after they receive inheritances. The results are consistent with Andrew Carnegie's century-old assertion that large inheritances decrease a person's labor force participation. For example, a single person who receives an inheritance of about $150,000 is roughly four times more likely to leave the labor force than a person with an inheritance below $25,000. Additional, albeit weaker, evidence suggests that large inheritances depress labor supply, even when participation is unaltered. Warren Kendall … heir to an insurance company fortune … says he's worth about $5 million and has an income of "about, oh, $300 and some thousand a year." [H]e has never held a job, or wanted to. Going down to sea in cruise ships is his full-time pursuit. He estimates that he has taken about 250 cruises over the past couple of decades, spending at least 50 percent to 70 percent of the year afloat [Morgenthaler, 1991, p. Al].

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File URL: http://hdl.handle.net/10.2307/2118337
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Article provided by Oxford University Press in its journal The Quarterly Journal of Economics.

Volume (Year): 108 (1993)
Issue (Month): 2 ()
Pages: 413-435

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Handle: RePEc:oup:qjecon:v:108:y:1993:i:2:p:413-435.
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  1. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
  2. Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1986. "The Strategic Bequest Motive," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 151-182, July.
  3. B. Douglas Bernheim, 1987. "Ricardian Equivalence: An Evaluation of Theory and Evidence," NBER Chapters,in: NBER Macroeconomics Annual 1987, Volume 2, pages 263-316 National Bureau of Economic Research, Inc.
  4. David Joulfaian & Mark O. Wilhelm, 1994. "Inheritance and Labor Supply," Journal of Human Resources, University of Wisconsin Press, vol. 29(4), pages 1205-1234.
  5. Duncan, Greg J & Hill, Daniel H, 1989. "Assessing the Quality of Household Panel Data: The Case of the Panel Study of Income Dynamics," Journal of Business & Economic Statistics, American Statistical Association, vol. 7(4), pages 441-452, October.
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