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The Effect of Inheritance Receipt on Retirement

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

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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File URL: http://www.nber.org/papers/w12386.pdf
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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
Note: AG LS
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