Intergenerational Transfers and Asset Inequality in Japan: Empirical Evidence from New Survey Data

This paper tries to quantitatively examine the impact of intergenerational transfers on asset inequality among Japanese households. For that purpose, we estimate an intergenerational asset transfer function with various control variables, using a unique micro dataset taken from the “Household Survey on Family Relationships, Employment, Retirement Payments, and Intergenerational Transfers of Assets and Education,” conducted by the Economic and Social Research Institute, Cabinet Office, Government of Japan. Employing three different models - a Tobit model, an interval regression model, and an ordered probit model - to ensure that our results are independent of the specific econometric approach used, we examine whether asset transfers received are correlated with households’ financial strength. We find that higher income households are likely to receive larger asset transfers. However, the contribution of intergenerational transfers to asset inequality appears to be quantitatively limited when measuring financial strength in terms of households’ life cycle wealth.