Bequests and wealth inequality in Japan

Taiki Ono

Journal of the Japanese and International Economies, 2024, vol. 72, issue C

Abstract: This study explores the effect of bequests on wealth inequality in Japan. We construct a heterogeneous life cycle model incorporating the transmission of physical and human capital from parents to their children, particularly bequests transfer and the positive correlation of productivity between them. Our model generates more realistic wealth dispersion in Japan compared to a canonical life cycle model which does not include such capital links. The bequest motives, that is, the desire to leave bequests, increase savings in old age. However, the expectation of receiving bequests in the future leads to a decline in savings when young. Moreover, bequests increase lifetime income, inducing wealth accumulation for achieving more consumption over the life cycle.

Keywords: Wealth inequality; Bequests; Life cycle; Human capital transmission (search for similar items in EconPapers)
JEL-codes: D15 D31 E21 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:72:y:2024:i:c:s0889158324000108

DOI: 10.1016/j.jjie.2024.101314

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