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The Impact of Bequest Motives on Retirement Behavior in Japan: A Theoretical and Empirical Analysis

Author

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  • Charles Yuji Horioka

    (Research Institute for Economics and Business Administration, Kobe University, Osaka University, Asian Growth Research Institute, and National Bureau of Economic Research, Japan)

  • Emin Gahramanov

    (American University of Sharjah, UAE)

  • Aziz Hayat

    (Deakin University, Australia)

  • Xueli Tang

    (Deakin University, Australia)

Abstract

In this paper, we conduct a theoretical and empirical analysis of the impact of bequest motives on the work and retirement behavior of households in Japan using micro data from the Preference Parameters Study of Osaka University. Our empirical findings are consistent with our theoretical model and show that respondents with an altruistic or strategic/exchange bequest motive work more at the intensive margin than those without any bequest motive but that respondents with a strategic or exchange bequest motive work less at the extensive margin (i.e., retire earlier) than those without any bequest motive. Our findings for the strategic or exchange motive suggest that respondents with such a motive tend to work harder than others before they retire so that they can earn more, leave a larger bequest to their children, and elicit more care from them but that they tend to retire earlier than others so that they can start receiving care for themselves and their spouses from their children sooner. A policy implication of our findings is that the exchange of bequests for the care of parents by children may be very sensitive to the inheritance tax framework.

Suggested Citation

  • Charles Yuji Horioka & Emin Gahramanov & Aziz Hayat & Xueli Tang, 2019. "The Impact of Bequest Motives on Retirement Behavior in Japan: A Theoretical and Empirical Analysis," Discussion Paper Series DP2019-26, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2019-26
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    References listed on IDEAS

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    More about this item

    Keywords

    Altruistic bequest motive; Bequest motives; Exchange bequest motive; Inheritances; Japan; Labor supply; Retirement; Strategic bequest motive; Working hours;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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