Heterogeneity of the Carnegie Effect

Arbeitspapier

The Carnegie effect (Holtz-Eakin, Joualfaian and Rosen, 1993) refers to the idea that inherited wealth harms recipient's work efforts, and possesses a key role in the discussion of taxation of intergenerational transfers. However, Carnegie effect estimates are few, reflecting that such effects are hard to trace in data. Most previous studies have relied on data from limited size sample surveys. Here we use information from a rich administrative data set covering the entire Norwegian population, which makes it possible to undertake a detailed examination of the Carnegie effect, including how it varies across groups of recipients. The estimation results show significant reductions in labor supply for recipients of large inheritances, in the range from 7 to 10 percent in the first six years after the transfer. Moreover, we find that the Carnegie effects differ according to the size of the transfer, the age of the recipients, the recipient's eligibility to other transfer programs, and the existence of new heirs in the family chain.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Papers ; No. 853

Classification and Topics

• Classification: Wirtschaft ; Household Behavior: General ; Information, Knowledge, and Uncertainty: General ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Time Allocation and Labor Supply
• Subject: inheritance ; labor supply ; heterogeneous responses

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bø, Erlend E. ; Halvorsen, Elin ; Thoresen, Thor O.
• Event: Veröffentlichung
• (who): Statistics Norway, Research Department
• (where): Oslo
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/192835