The Carnegie Conjecture: Some Empirical Evidence

Douglas Holtz-Eakin, David Joulfaian () and Harvey S. Rosen

The Quarterly Journal of Economics, 1993, vol. 108, issue 2, 413-435

Abstract: This paper examines tax-return-generated data on the labor force behavior of people before and after they receive inheritances. The results are consistent with Andrew Carnegie's century-old assertion that large inheritances decrease a person's labor force participation. For example, a single person who receives an inheritance of about $150,000 is roughly four times more likely to leave the labor force than a person with an inheritance below $25,000. Additional, albeit weaker, evidence suggests that large inheritances depress labor supply, even when participation is unaltered. Warren Kendall … heir to an insurance company fortune … says he's worth about $5 million and has an income of "about, oh, $300 and some thousand a year." [H]e has never held a job, or wanted to. Going down to sea in cruise ships is his full-time pursuit. He estimates that he has taken about 250 cruises over the past couple of decades, spending at least 50 percent to 70 percent of the year afloat [Morgenthaler, 1991, p. Al].

Date: 1993
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Working Paper: The Carnegie Conjecture: Some Empirical Evidence (1992)
Working Paper: The Carnegie Conjecture: Some Empirical Evidence (1992)
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