 Time to smell the roses? Risk aversion, the timing of inheritance receipt, and retirementBertrand Garbinti and Simon Georges-Kot Documents de Travail de l'Insee - INSEE Working Papers from Institut National de la Statistique et des Etudes Economiques Abstract: Understanding when workers choose to retire is key for the design of public pensions and labor market policies. Private wealth may play a substantial role in retirement decisions, but little is still known on the link between the two. In this paper, we explore a new way to leverage the receipt of an inheritance as a plausible exogenous wealth shock, by relying on the precise timing of receipt. Using retrospective calendars from the French wealth survey, we find that, at any age between 55 and 65, chances of current labor market exit are 40% higher among individuals who inherit at that age than among those who inherit in the next few years. To go further in understanding the effect of inheritance receipt on labor force participation, we develop a model of retirement choice with risk aversion and an endogenous replacement rate and we test its predictions. We find that inheritance receipt triggers current labor force exit because risk averse individuals plan their retirement date according to the certainty equivalent of their bequest, not its expected value. Keywords: Retirement; inheritance; labor supply; risk aversion (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:nse:doctra:g2016-01 Access Statistics for this paper More papers in Documents de Travail de l'Insee - INSEE Working Papers from Institut National de la Statistique et des Etudes Economiques Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.