The Effect of Inheritance Receipt on Labor Supply: A Longitudinal Study of Japanese Women

Junya Hamaaki and Ibuka Yoko
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Ibuka Yoko: Faculty of Economics, Keio University, 2-15-45 Mita, Minato-ku, Tokyo 108-8345, Japan

The B.E. Journal of Economic Analysis & Policy, 2024, vol. 24, issue 4, 1259-1305

Abstract: This study examines the effect of inheritance receipt on labor supply, exploring the empirical issues associated with inheritance expectations, informal caregiving, and liquidity constraints. The literature has not examined the possibility that ignoring the labor supply increase associated with the termination of caregiving can lead to an underestimation of the decrease in labor supply after inheritance. Based on a dataset of Japanese women, we found that inheritance decreased labor supply, primarily through changes in the extensive margin, particularly for recipients in their 50s and under 40 years of age with children. Unlike labor supply, household expenditures hardly change after an inheritance. Furthermore, unanticipated inheritances reduce labor supply compared to anticipated inheritances. Additionally, controlling for the termination of caregiving responsibilities resulted in a 25 % larger estimate of the wealth effect of inheritance receipt on labor supply. Finally, pre-inheritance liquidity constraints have no effect on changes in labor supply.

Keywords: labor supply; inheritances; wealth effect; informal care; Japan (search for similar items in EconPapers)
JEL-codes: E24 H31 J22 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1515/bejeap-2022-0412

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