ESRI Discussion Paper Series No.393 The effect of inheritance receipt on labor supply: A longitudinal study of Japanese women

　This study examines the effect of inheritance receipt on labor supply, exploring empirical issues associated with inheritance expectations, informal caregiving, and liquidity constraints. Using a dataset on Japanese women, we find that inheritance from respondents’ parent decreases labor supply, mainly due to changes in the extensive margin. Notably, respondents in their 50s and those under 40 with children experience a more pronounced effect. The labor supply reduction is replaced with an increase in time spent on domestic work and personal maintenance. Unlike labor supply, household expenditures hardly change after an inheritance. Furthermore, the results reveal that unanticipated inheritances are more likely to reduce labor supply than anticipated ones and that ignoring the labor supply increase associated with the end of caregiving leads to an underestimation of the reduction in labor supply after inheritance. Finally, the change in labor supply does not depend on respondents’ pre-inheritance liquidity constraints.