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Research ArticleArticle

Heterogeneity of the Carnegie Effect

Erlend E. Bø, Elin Halvorsen and Thor O. Thoresen
Published online before print January 04, 2018, 0915-7366R1; DOI: https://doi.org/10.3368/jhr.54.3.0915.7366R1
Erlend E. Bø
†Research Department, Statistics Norway
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Elin Halvorsen
‡Research Department, Statistics Norway, P.O. Box 8131 Dep, N-0033 Oslo, tel: +47-48056823
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Thor O. Thoresen
§Research Department, Statistics Norway, Oslo Fiscal Studies (Department of Economics, University of Oslo) and CESifo (Munich)
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Abstract

The Carnegie effect (Holtz-Eakin, Joualfaian and Rosen, 1993) refers to the idea that inherited wealth harms recipient’s work efforts, and possesses a key role in the discussion of taxation of intergenerational transfers. However, Carnegie effect estimates are few, reflecting that such effects are hard to trace in data. Most previous studies have relied on data from limited size sample surveys. Here we use information from a rich administrative data set covering the entire Norwegian population, which makes it possible to undertake a detailed examination of the Carnegie effect, including how it varies across groups of recipients. The estimation results show significant reductions in labor supply for recipients of large inheritances, in the range from 7 to 10 percent per year in the first six years after the transfer. Moreover, we find that the Carnegie effects differ according to the size of the transfer, the age of the recipients, the recipient’s eligibility to other transfer programs, and the existence of new heirs in the family chain.

Keywords
  • inheritance
  • labor supply
  • heterogeneous responses
JEL codes
  • D10
  • D80
  • D91
  • J22

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Journal of Human Resources: 60 (3)
Journal of Human Resources
Vol. 60, Issue 3
1 May 2025
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Heterogeneity of the Carnegie Effect
Erlend E. Bø, Elin Halvorsen, Thor O. Thoresen
Journal of Human Resources Jan 2018, 0915-7366R1; DOI: 10.3368/jhr.54.3.0915.7366R1

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Heterogeneity of the Carnegie Effect
Erlend E. Bø, Elin Halvorsen, Thor O. Thoresen
Journal of Human Resources Jan 2018, 0915-7366R1; DOI: 10.3368/jhr.54.3.0915.7366R1
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Keywords

  • inheritance
  • labor supply
  • heterogeneous responses
  • D10
  • D80
  • D91
  • J22
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