IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

The Effect of Inheritance Receipt on Labor and Capital Income: Evidence from Swedish Panel Data

  • Elinder, Mikael

    ()

    (Uppsala Center for Fiscal Studies)

  • Erixson, Oscar

    ()

    (Uppsala Center for Fiscal Studies)

  • Ohlsson, Henry

    ()

    (Uppsala Center for Fiscal Studies)

In this paper we study the effects of inheritances on labor and capital income of heirs. We use unique register based Swedish panel data to estimate both short run and medium run responses. The few existing studies have mainly focused on short run responses, using data from the U.S. Models of life cycle consumption stress that anticipated and unanticipated income changes have different impacts on the optimal consumption path. In Sweden, as in other countries with extensive public insurances and succession rules that prohibit decedents from bequeathing the entire estate to others than their children, inheritances are likely to be anticipated to a higher degree than in the U.S. Our estimates suggest that there is a negative effect of inheriting on labor income in the year of the receipt and the year after, and that the negative effect is even larger two to three years after receiving the inheritance. Moreover, we find that capital income increases by an amount corresponding to wealth increasing at least by the amount inherited.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://ucfs.nek.uu.se/digitalAssets/129/129562_wp20103.pdf
Download Restriction: no

Paper provided by Uppsala University, Department of Economics in its series Working Paper Series, Center for Fiscal Studies with number 2010:3.

as
in new window

Length: 28 pages
Date of creation: 27 Apr 2010
Date of revision:
Publication status: Published as Elinder, Mikael, Oscar Erixson and Henry Ohlsson, 'The Effect of Inheritance Receipt on Labor and Capital Income: Evidence from Swedish Panel Data' in The impact of inheritances on heirs’ labor and capital income' in B.E. Journal of Economic Analysis & Policy, 2012.
Handle: RePEc:hhs:uufswp:2010_003
Contact details of provider: 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
Web page: http://www.nek.uu.se/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Bernheim, B. Douglas & Lemke, Robert J. & Scholz, John Karl, 2004. "Do estate and gift taxes affect the timing of private transfers?," Journal of Public Economics, Elsevier, vol. 88(12), pages 2617-2634, December.
  2. Engelhardt, Gary V., 1996. "House prices and home owner saving behavior," Regional Science and Urban Economics, Elsevier, vol. 26(3-4), pages 313-336, June.
  3. Erik Hurst & Annamaria Lusardi, 2004. "Liquidity Constraints, Household Wealth, and Entrepreneurship," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 319-347, April.
  4. MaCurdy, Thomas E, 1981. "An Empirical Model of Labor Supply in a Life-Cycle Setting," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1059-85, December.
  5. Douglas Holtz-Eakin & David Joulfaian & Harvey S. Rosen, 1993. "Sticking it Out: Entrepreneurial Survival and Liquidity Constraints," NBER Working Papers 4494, National Bureau of Economic Research, Inc.
  6. Ohlsson, Henry, 2007. "The legacy of the Swedish gift and inheritance tax, 1884–2004," Working Paper Series 2007:23, Uppsala University, Department of Economics.
  7. Douglas Holtz-Eakin & David Joulfaian & Harvey Rosen, 1992. "The Carnegie Conjecture: Some Empirical Evidence," Working Papers 682, Princeton University, Department of Economics, Industrial Relations Section..
  8. Courtney C. Coile & Phillip B. Levine, 2004. "Bulls, Bears, and Retirement Behavior," NBER Working Papers 10779, National Bureau of Economic Research, Inc.
  9. Wojciech Kopczuk, 2010. "Economics of estate taxation: a brief review of theory and evidence," NBER Working Papers 15741, National Bureau of Economic Research, Inc.
  10. Blanchflower, D.G. & Oswald, A., 1991. "What Makes an Entrepreneur?," Economics Series Working Papers 99125, University of Oxford, Department of Economics.
  11. David Joulfaian, 2006. "Inheritance and Saving," NBER Working Papers 12569, National Bureau of Economic Research, Inc.
  12. James M. Poterba, 2000. "Stock Market Wealth and Consumption," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 99-118, Spring.
  13. Andrew B. Abel & Mark Warshawsky, . "Specification of the Joy of Giving: Insights from Altruism," Rodney L. White Center for Financial Research Working Papers 3-87, Wharton School Rodney L. White Center for Financial Research.
  14. Feldstein, Martin, 1995. "Effect of Marginal Tax Rates on Taxable Income: A Panel Study of the 1986 Tax Reform Act," Scholarly Articles 2766676, Harvard University Department of Economics.
  15. Kurz, Mordecai, 1984. "Capital Accumulation and the Characteristics of Private Inter-Generational Transfers," Economica, London School of Economics and Political Science, vol. 51(201), pages 1-22, February.
  16. Blomquist, Sören & Selin, Håkan, 2008. "Hourly Wage Rate and Taxable Labor Income Responsiveness to Changes in Marginal Tax Rates," Working Paper Series, Center for Fiscal Studies 2009:1, Uppsala University, Department of Economics.
  17. 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 S151-82, July.
  18. Blinder, Alan S, 1976. "Intergenerational Transfers and Life Cycle Consumption," American Economic Review, American Economic Association, vol. 66(2), pages 87-93, May.
  19. Eliason, Marcus & Ohlsson, Henry, 2010. "Timing of death and the repeal of the Swedish inheritance tax," Working Paper Series, Center for Fiscal Studies 2010:2, Uppsala University, Department of Economics.
  20. Horioka, Charles Yuji, 2009. "Do bequests increase or decrease wealth inequalities?," Economics Letters, Elsevier, vol. 103(1), pages 23-25, April.
  21. Ing-Haw Cheng & Eric French, 2000. "The effect of the run-up in the stock market on labor supply," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 48-65.
  22. Juster, F. Thomas & Smith, James P. & Stafford, Frank, 1999. "The measurement and structure of household wealth," Labour Economics, Elsevier, vol. 6(2), pages 253-275, June.
  23. Lindh, Thomas & Ohlsson, Henry, 1996. "Self-Employment and Windfall Gains: Evidence from the Swedish Lottery," Economic Journal, Royal Economic Society, vol. 106(439), pages 1515-26, November.
  24. Bolin, K. & Lindgren, B. & Lundborg, P., 2008. "Your next of kin or your own career?: Caring and working among the 50+ of Europe," Journal of Health Economics, Elsevier, vol. 27(3), pages 718-738, May.
  25. Faria, João Ricardo & Wu, Zhongmin, 2012. "From unemployed to entrepreneur: The role of the absolute bequest motive," Economics Letters, Elsevier, vol. 114(1), pages 120-123.
  26. Wojciech Kopczuk, 2006. "Bequest and Tax Planning: Evidence From Estate Tax Returns," NBER Working Papers 12701, National Bureau of Economic Research, Inc.
  27. Wojciech Kopczuk, 2004. "Tax bases, tax rates and the elasticity of reported income," Discussion Papers 0304-15, Columbia University, Department of Economics.
  28. Guido W. Imbens & Donald B. Rubin & Bruce I. Sacerdote, 2001. "Estimating the Effect of Unearned Income on Labor Earnings, Savings, and Consumption: Evidence from a Survey of Lottery Players," American Economic Review, American Economic Association, vol. 91(4), pages 778-794, September.
  29. F. Thomas Juster & Joseph P. Lupton & James P. Smith & Frank Stafford, 2006. "The Decline in Household Saving and the Wealth Effect," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 20-27, February.
  30. Martin Feldstein, 1995. "Tax Avoidance and the Deadweight Loss of the Income Tax," NBER Working Papers 5055, National Bureau of Economic Research, Inc.
  31. Miles S. Kimball, 1989. "Precautionary Saving in the Small and in the Large," NBER Working Papers 2848, National Bureau of Economic Research, Inc.
  32. Thomas Piketty, 2011. "On the Long-Run Evolution of Inheritance: France 1820--2050," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1071-1131.
  33. Viola Angelini, 2007. "The strategic bequest motive: evidence from SHARE," "Marco Fanno" Working Papers 0062, Dipartimento di Scienze Economiche "Marco Fanno".
  34. David Joulfaian & Mark O. Wilhelm, 1994. "Inheritance and Labor Supply," Journal of Human Resources, University of Wisconsin Press, vol. 29(4), pages 1205-1234.
  35. Feldstein, Martin, 1995. "The Effect of Marginal Tax Rates on Taxable Income: A Panel Study of the 1986 Tax Reform Act," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 551-72, June.
  36. Kopczuk, Wojciech & Saez, Emmanuel, 2004. "Top Wealth Shares in the United States, 1916-2000: Evidence from Estate Tax Returns," National Tax Journal, National Tax Association, vol. 57(2), pages 445-87, June.
  37. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
  38. Joulfaian, David, 2004. "Gift taxes and lifetime transfers: time series evidence," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1917-1929, August.
  39. Elinder, Mikael & Erixson, Oscar & Ohlsson, Henry, 2010. "The Effect of Inheritance Receipt on Labor and Capital Income: Evidence from Swedish Panel Data," Working Paper Series, Center for Fiscal Studies 2010:3, Uppsala University, Department of Economics.
  40. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-93, Nov.-Dec..
  41. Nordblom, Katarina & Ohlsson, Henry, 2005. "Tax avoidance and intra-family transfers," Working Papers in Economics 164, University of Gothenburg, Department of Economics.
  42. Jon Gruber & Emmanuel Saez, 2000. "The Elasticity of Taxable Income: Evidence and Implications," NBER Working Papers 7512, National Bureau of Economic Research, Inc.
  43. Jere R. Behrman & Mark R. Rosenzweig, 2004. "Parental Allocations to Children: New Evidence on Bequest Differences among Siblings," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 637-640, May.
  44. Barro, Robert J., 1974. "Are Government Bonds Net Wealth?," Scholarly Articles 3451399, Harvard University Department of Economics.
  45. Ohlsson, Henry, 2007. "The equal division puzzle – empirical evidence on intergenerational transfers in Sweden," Working Paper Series 2007:10, Uppsala University, Department of Economics.
  46. Blomquist, N. S., 1979. "The inheritance function," Journal of Public Economics, Elsevier, vol. 12(1), pages 41-60, August.
  47. Elisabeth Fevang & Snorre Kverndokk & Knut Røed, 2012. "Labor supply in the terminal stages of lone parents’ lives," Journal of Population Economics, Springer, vol. 25(4), pages 1399-1422, October.
  48. Susan Ettner, 1995. "The impact of “parent care” on female labor supply decisions," Demography, Springer, vol. 32(1), pages 63-80, February.
  49. Weil, David N, 1994. "The Saving of the Elderly in Micro and Macro Data," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 55-81, February.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:hhs:uufswp:2010_003. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Katarina Grönvall)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.