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Bequests and Household Assets

Owing to the weakness of asset prices since the bursting of Japan's economic bubble, there has been little interest in the intergenerational transfer of household assets over the past few years. I expect such transfers and bequests to become increasingly important, however, given that (1) more than half of all savings and net assets in Japan are concentrated in senior households, and that proportion is increasing; (2) the number of heirs is declining, because it is the generations born during the postwar decline in fertility rates that will be receiving these bequests; and (3) the current stagnation in wages is constraining the role of labor income in the formation of household assets. This paper provides an empirical analysis of the current state of bequests and their impact on household assets, based on Japanese data. One implication of my analysis is that, in the future, Japanese households may be able to invest more of their inheritance in financial assets because they receive it later in life when they have fewer obligations. As a consequence, financial markets should see increased inflows from transfers and bequests.