Economic Analysis of the Bequeathing Behavior of the Elderly Households in Japan
Kohei Komamura*
Abstract
With the soaring of land and stock prices in the Japanese economy, inheritance has come to play an increasingly important role. The distribution of inheritable assets among family members affects the living conditions of the aged and the asset formation of both the aged and the young. Detailed investigation into how the assets of the parents are distributed is a major theme In the study of the patterns of saving and the supply of labor for the care of the elderly, I shall make an empirical analysis using survey data, based on the selfish, exchange-oriented bequest motive model, assuming that the "bequest is made by parents to children in return for their support of, or living together with, the parents." A positive relationship is confirmed between the parent-child cohabitation or support of the parents and the amount of a bequest. It is also confirmed that this relationship varies according to the gender of the heir(s), the living conditions of parents and the history of asset formation. This fact suggests, moreover, that bequests are made in the form of exchange for support by children. Based on these findings, it becomes clear that the reform of the inheritance law to reduce the legal portion of inheritable assets distributed to each child will have political implications, as it will improve the welfare of the elderly.
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