Heterogeneity of the Carnegie Effect

Erlend Eide Bø, Elin Halvorsen, and Thor Olav Thoresen

The Journal of Human Resources

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The Carnegie effect is the harm inherited wealth does to a recipient’s work effort. Carnegie effect estimates are few, reflecting that such effects are hard to trace. Most previous studies rely on data from limited-size surveys. We use information from administrative data covering the entire Norwegian population, enabling an examination of the heterogeneity of the Carnegie effect. Estimation results show significant reductions in labor supply for recipients of large inheritances. We find that Carnegie effects differ according to transfer size, the recipient’s age and eligibility for other transfer programs, and the existence of new heirs in the family chain.

Published Nov. 10, 2019 8:40 PM - Last modified Feb. 16, 2021 5:32 PM