Wealth Accumulation of the Elderly in Extended Families in Japan and the Distribution of Wealth within Japanese Cohorts by Household Composition

This paper is a critique of the literature on transfer wealth accumulation in Japan during the postwar period. The emphasis is on selected works in two areas that are closely related: the accumulation of wealth by the elderly in extended families in Japan, and the distribution of wealth within Japanese cohorts by household composition.

The central point of contention is what relationship, if any, exists between the age of the elderly in extended families and the accumulation or decumulating of wealth Ando concludes that increasing age positively correlates with decumulating wealth. In contrast, a subsequent paper by Hayashi, Ando, and Ferris asserts that the elderly in families are actually accumulating wealth. However, neither conclusion is supported by existing empirical data since the authors fail to account for the joint effect of wealth between young people and the elderly in extended families-the wealth of the young may interact with the wealth of the elderly.

The current literature, in addition to relying on invalid conclusions of a relationship between the elderly in extended families and wealth, is plagued by insufficient empirical evidence (e.g. failure to demonstrate a link between wealth and present income, making broad assumptions about transfer of wealth from parents to children, etc.). In sum, the existing research has not yet demonstrated that the elderly in extended families in recent years have been accumulating or decumulating assets, also there is no evidence (contrary to popular belief) of a relationship between household composition and the wealth.

Working Paper No. 63(136.79 KB)