The effect of inheritance receipt on retirement

Research output: Contribution to journalArticle

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.

Original languageEnglish (US)
Pages (from-to)425-434
Number of pages10
JournalReview of Economics and Statistics
Volume92
Issue number2
DOIs
StatePublished - Apr 15 2010

ASJC Scopus subject areas

  • Social Sciences (miscellaneous)
  • Economics and Econometrics

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