The Effect of Inheritance Receipt on Retirement

Jeffrey Robert Brown (), Courtney C. Coile and Scott J. Weisbenner

No 12386, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: J14 J26 (search for similar items in EconPapers)
Date: 2006-07
Note: AG LS
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