Inheritance and Saving
This paper explores the effects of inheritances on the saving of recipients. Information on inheritances and heirs is obtained from estate tax records of decedents which are linked to the income tax records of beneficiaries. The observed pattern of wealth mobility within two years of the receipt of inheritances and multivariate analyses show that wealth increases by less than the full amount of the inheritance received. Similarly, and consistent with previous findings, large inheritances are found to depress labor force participation.
The paper benefited from comments by Deena Ackerman, Gerald Auten, Brad Heim, and Don Kiefer. It was completed during my visit at NBER, whose support is gratefully acknowledged. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.