Inheritances and work for pay — will the expected wave of bequests undermine active ageing policies?

It is frequently assumed that the inheritance of wealth undermines economic activity. If such an assumption is valid, the expected wave of bequests may have a negative impact on labour market activity of heirs, what might further weaken the financing of state pension systems. This paper provides a detailed review of the empirical findings on the associations of inheritances with labour market activity, that is labour force participation status and working hours, and presents own analyses based on the survey of health, ageing, and retirement in Europe. We find that the receipt of an inheritance is not related to labour force participation in general. Inheritance expectations even have a small, but statistically significant positive effect on remaining in the labour force for men. Women who expect an inheritance tend to reduce working hours, but the effect of having received an inheritance is not significant, neither for men nor for women. We conclude that the receipt of an inheritance will not affect labour market decisions, so that the expected wave of bequests will not undermine active ageing policies.