How Strong Are Bequest Motives?
54 Pages Posted: 14 Jun 2017 Last revised: 1 Jun 2018
Date Written: April 24, 2018
This paper infers the importance of bequest motives from unanticipated mortality shocks using a panel of 45,000 households obtained from merging administrative data on individual cancer diagnoses with income, wealth, and family linkages. Estimates show that family structures are crucial for individual responses to mortality shocks. For couples, changes in life expectancy have no impact on consumption and saving choices. In contrast, widowed individuals respond to mortality shocks by transferring a large part of their wealth to their children. The size of these inter-vivos transfers is positively related to the wealth rank of the parent and negatively related to the wealth rank of the children. Taken together, the results provide empirical support for dynastic models of over-lapping generations.
JEL Classification: D1, D14, D31, E21, I12
Suggested Citation: Suggested Citation