The carnegie conjecture: Some empirical evidence

Douglas Holtz-Eakin, David Joulfaian, Harvey S. Rosen

Research output: Contribution to journalArticlepeer-review

179 Scopus citations


This paper examines tax-return-generated data on the labor force behavior of people before and after they receive inheritances. The results are consistent with Andrew Carnegie's century-old assertion that large inheritances decrease a person's labor force participation. For example, a single person who receives an inheritance of about $150, 000 is roughly four times more likely to leave the labor force than a person with an inheritance below $25, 000. Additional, albeit weaker, evidence suggests that large inheritances depress labor supply, even when participation is unaltered. Warren Kendall … heir to an insurance company fortune … says he's worth about $5 million and has an income of “about, oh, $300 and some thousand a year.” [H]e has never held a job, or wanted to. Going down to sea in cruise ships is his full-time pursuit. He estimates that he has taken about 250 cruises over the past couple of decades, spending at least 50 percent to 70 percent of the year afloat [Morgenthaler, 1991, p. Al].

Original languageEnglish (US)
Pages (from-to)413-435
Number of pages23
JournalQuarterly Journal of Economics
Issue number2
StatePublished - May 1993

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


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