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Intergenerational Transfers, Aging, and Uncertainty

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  • David N. Weil

Abstract

Research 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.

Suggested Citation

  • David N. Weil, 1993. "Intergenerational Transfers, Aging, and Uncertainty," NBER Working Papers 4477, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:4477
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    1. Elinder Mikael & Erixson Oscar & Ohlsson Henry, 2012. "The Impact of Inheritances on Heirs' Labor and Capital Income," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-37, December.
    2. Onder,Harun & Pestieau,Pierre, 2016. "Inherited wealth and demographic aging," Policy Research Working Paper Series 7739, The World Bank.
    3. Harun Onder & Pierre Pestieau, 2016. "Aging and the Inherited Wealth of Nations," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(01), pages 30-36, May.
    4. Stefania Basiglio & Mariacristina Rossi & Arthur, 2019. "“Subjective inheritance expectations and economic outcomes”," CeRP Working Papers 190, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    5. Malo, Miguel Á. & Sciulli, Dario, 2023. "Expected wealth transfers and consumption across the wealth distribution in Europe," Economic Modelling, Elsevier, vol. 126(C).
    6. 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, vol. 107(440), pages 26-46, January.
    7. David Joulfaian, 2006. "Inheritance and Saving," NBER Working Papers 12569, National Bureau of Economic Research, Inc.
    8. Basiglio, Stefania, 2018. "Essays on financial behaviour of households and firms," Other publications TiSEM c13423c5-8bf2-44a7-baa7-3, Tilburg University, School of Economics and Management.

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    More about this item

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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