The Effect of Inheritance Receipt on Retirement

TitleThe Effect of Inheritance Receipt on Retirement
Publication TypeJournal Article
Year of Publication2010
AuthorsBrown, JR, Coile, C, Weisbenner, SJ
JournalReview of Economics and Statistics
Volume92
Issue2
Pagination425-434
KeywordsAdult children, Employment and Labor Force, Net Worth and Assets, Other, Retirement Planning and Satisfaction
Abstract

This paper provides new evidence on how wealth shocks influence retirement behavior. Economic theory generally posits that leisure is a normal good, yet it is difficult to obtain reliable empirical estimates of the wealth effect because wealth is correlated with numerous unobservable characteristics that affect labor supply. We use inheritance receipt as a wealth shock and find that it is associated with a significant increase in the probability of retirement, especially when the inheritance is unexpected. This evidence has important implications for how public policies, such as pension or tax reform, may influence retirement behavior through the wealth effect.

URLhttp://www.mitpressjournals.org/doi/abs/10.116
DOI10.1162/rest.2010.11182
Endnote Keywords

Wealth/Impact analysis/Retirement planning/Inheritances/Studies/Labor supply

Endnote ID

25260

Citation Key7532