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

Author

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  • Hamaaki Junya

    (Faculty of Economics, 199514 Hosei University , 4342 Aihara, Machida - shi, Tokyo 194-0298, Japan)

  • Ibuka Yoko

    (Faculty of Economics, Keio University, 2-15-45 Mita, Minato-ku, Tokyo 108-8345, Japan)

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.

Suggested Citation

  • Hamaaki Junya & Ibuka Yoko, 2024. "The Effect of Inheritance Receipt on Labor Supply: A Longitudinal Study of Japanese Women," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 24(4), pages 1259-1305.
    • Handle: RePEc:bpj:bejeap:v:24:y:2024:i:4:p:1259-1305:n:1002
    DOI: 10.1515/bejeap-2022-0412
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    More about this item

    Keywords

    labor supply; inheritances; wealth effect; informal care; Japan;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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