Effects of House-Inheriting on Labor and Family Decisions

People’s response to inheritances has been a crucial topic in public finance literature. This research estimates the causal effects of inheriting a house on work, marital, and fertility outcomes. With the Taiwanese administrative tax data, we use an event study design to compare those who suffered from the loss of parents and received house inheritances to those who did not. We find that inheriting houses from parents decreases the labor supply and increases marriage and fertility rates. The significant increases in marriage and fertility support the long conjectured anecdote that house possession plays a crucial role in household formation in Taiwanese culture. We also observe rich heterogeneity in age and gender, where young inheritance recipients display more significant effects. Similar effects are also found in spouses married to recipients.