Unexpected Inheritances and Household Labor Supply: Does the Identity of the Recipient Matter?

Abstract

Traditionally, the data on inheritances in surveys are analyzed assuming that they are equally shared within households. However, inheritances are commonly individual assets, regardless of the marital property regime adopted at the time of marriage. In this paper, we examine the impact of individual unexpected inheritances on household labor supply. To do so, we use data from the SHARE for 2006–2015, covering 13 European countries, and adopt a collective perspective to analyze whether inheritances are equally distributed within the household or if the identity of the recipient matters. We reject the inheritance pooling hypothesis in favor of the intrahousehold approach. Our results suggest that females decrease their labor force participation by 5.3% points if they have received an unexpected inheritance since the prior interview, whereas we find no impact on the labor supply of males. These results can inform the design of fiscal policies on inheritances in Europe.