The Impact of Bequest Motives on Retirement Behavior in Japan: A Theoretical and Empirical Analysis

ISER DP No. 1073, 2020

43 Pages Posted: 3 Feb 2020

See all articles by Charles Yuji Horioka

Charles Yuji Horioka

Kobe University; National Bureau of Economic Research; Asian Growth Research Institute; Osaka University

Emin Gahramanov

American University of Sharjah - Department of Economics

Aziz Hayat

Deakin University

Xueli Tang

Deakin University

Multiple version iconThere are 2 versions of this paper

Date Written: January 7, 2020

Abstract

In this paper, we conduct a theoretical and empirical analysis of the impact of bequest motives on the work and retirement behavior of households in Japan using micro data from the Preference Parameters Study of Osaka University. Our empirical findings are consistent with our theoretical model and show that respondents with an altruistic or strategic/exchange bequest motive work more at the intensive margin than those without any bequest motive but that respondents with a strategic or exchange bequest motive work less at the extensive margin (i.e., retire earlier) than those without any bequest motive. Our findings for the strategic or exchange motive suggest that respondents with such a motive tend to work harder than others before they retire so that they can earn more, leave a larger bequest to their children, and elicit more care from them but that they tend to retire earlier than others so that they can start receiving care for themselves and their spouses from their children sooner. A policy implication of our findings is that the exchange of bequests for the care of parents by children may be very sensitive to the inheritance tax framework.

Keywords: Altruistic Bequest Motive, Bequest Motives, Exchange Bequest Motive, Inheritances, Japan, Labor Supply, Retirement, Strategic Bequest Motive, Working Hours

JEL Classification: D15, D64, J14, J22, J26

Suggested Citation

Horioka, Charles Yuji and Gahramanov, Emin and Hayat, Aziz and Tang, Xueli, The Impact of Bequest Motives on Retirement Behavior in Japan: A Theoretical and Empirical Analysis (January 7, 2020). ISER DP No. 1073, 2020 , Available at SSRN: https://ssrn.com/abstract=3517031 or http://dx.doi.org/10.2139/ssrn.3517031

Charles Yuji Horioka (Contact Author)

Kobe University ( email )

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National Bureau of Economic Research ( email )

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Osaka University ( email )

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Emin Gahramanov

American University of Sharjah - Department of Economics ( email )

PO Box 26666
Sharjah
United Arab Emirates

Aziz Hayat

Deakin University ( email )

75 Pigdons Road
Victoria, 3216
Australia

Xueli Tang

Deakin University ( email )

75 Pigdons Road
Victoria, Victoria 3216
Australia

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