The effect of inheritance receipt on individual labor supply: Evidence from Japanese microdata

This paper examines the effects of wealth on individual labor supply by considering inheritance receipts as an exogenous change in household wealth. Using Japanese microdata consisting of individuals aged 26–51, we find that (i) while men’s probability of working does not respond to inheritance receipt, women’s probability of working decreases; and (ii) in the case of most respondents the receipt of an inheritance seems to be unanticipated. We also test the unitary household model using information on respondents’ spouses. The results indicate that who received an inheritance influences the labor supply decision of each household member, meaning that we find no support for the unitary model.