Dear colleagues,
Earnings Responses to Sudden Wealth: Inheritance, Inter-Vivos Gifts, and Lotteries
on Thursday, April 11; 3.00 p.m. at the INEQ Institute (D3.0.259, WU Vienna University of Economics and Business).
Abstract We study individual earnings responses to positive wealth shocks from inheritance, inter-vivos gifts, and lotteries. In a life-cycle model we show how responses may differ across the three types of shocks because they occur at different ages.
In addition, gifts tend to be targeted, and socio-psychological circumstances differ between the different shocks. We explore these differences in a panel of tax records for a large Swiss canton. We find consistently negative earnings responses, irrespective
of the source of the wealth shock. The strongest responses are found for older workers – partly through early retirement –, and for women. Conditional on age, inheritance triggers weaker earnings responses than lottery winnings. Gifts are associated with the
strongest reductions in subsequent earnings. However, strong pre-trends confirm them to be targeted and do not allow us to quantify the causal effect of inter-vivos giving. For instrumented gifts, however, no statistically significant earnings response is
observed. This suggests that, when abstracting from targeting, behavioral effects mitigate labor supply reductions of donees.
Please register your participation
here.
Best regards,
Franziska Disslbacher, Emanuel List and Jan Gromadzki
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Franziska Disslbacher, PhD
Assistant Professor
Research Institute Economics of Inequality &
Department Socio-Economics
+43 1 313 36 6669
franziska.disslbacher@wu.ac.at
franziskadisslbacher.com
WU, Vienna University of Economics and Business
Welthandelsplatz 1, 1020 Vienna, Austria
Building D3, D3 0.251