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Bequests and wealth inequality in Japan

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  • Ono, Taiki

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.

Suggested Citation

  • Ono, Taiki, 2024. "Bequests and wealth inequality in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:jjieco:v:72:y:2024:i:c:s0889158324000108
    DOI: 10.1016/j.jjie.2024.101314
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    More about this item

    Keywords

    Wealth inequality; Bequests; Life cycle; Human capital transmission;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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