Discussion Paper No.2406

Abstract :
Using a strategic bequest model, in which the parents present a bequest rule that relates the place of residence to the bequest distribution ratio to one of two children, this paper examines how the distribution of bequests among children and the location of each child are determined. The birth order of children has a different effect depending on the total amount of parental bequests. When bequests are small, the second child lives closer to the parents, and receives a larger part of the bequests than the first child. On the other hand, when bequests are large, the first child lives with the parents and receives a larger part of the bequests than the second child. The latter result is consistent with traditional Japanese family residential patterns, suggesting that they can be explained not only by cultural and social norms, but also by economic rationality.