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Does the exchange motive influence intergenerational transfers? Evidence from Ireland

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  • Sanna Nivakoski

    (Economic and Social Research Institute)

Abstract

This article examines the exchange motive in intergenerational monetary transfers. The exchange motive is in operation if parents make transfers to their children in exchange for services. The analysis incorporates data on current inter vivos transfers and the self-assessed probability of making future transfers via bequests. The focus is on the correlation between child-provided help and transfers from parents to adult children. Cross-sectionally, small transfers (between EUR 250 and EUR 5,000) and child-provided help are positively related. Endogeneity arising from omitted variables and reverse causality are addressed by using a lagged value of child-provided help. Further, in an analysis of first-differenced data, the association is statistically significant at the 10% level of confidence. The correlation is not significant in the case of large (above EUR 5,000) transfers, or the self-assessed probability of making future transfers via bequests. These findings suggest that small inter vivos transfers may be driven by exchange motives, although the findings are also consistent with altruism.

Suggested Citation

  • Sanna Nivakoski, 2019. "Does the exchange motive influence intergenerational transfers? Evidence from Ireland," Review of Economics of the Household, Springer, vol. 17(3), pages 1049-1079, September.
    • Handle: RePEc:kap:reveho:v:17:y:2019:i:3:d:10.1007_s11150-018-9422-4
    DOI: 10.1007/s11150-018-9422-4
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    Cited by:

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    2. Costa-Font, Joan & Jiménez-Martín, Sergi & Vilaplana-Prieto, Cristina, 2022. "Do Public Caregiving Subsidies and Supports affect the Provision of Care and Transfers?," Journal of Health Economics, Elsevier, vol. 84(C).
    3. Beirne, Keelan & Nolan, Anne & Roantree, Barra, 2020. "Income adequacy in retirement: Evidence from the Irish longitudinal study on ageing (TILDA)," Research Series, Economic and Social Research Institute (ESRI), number RS107, June.
    4. Hao-yu Hu & Wei Wang & Da-wei Feng & Hua-lei Yang & Zhong-kun Zhu, 2022. "Number of Children and Monetary Transfers to Elderly Parents in Rural China," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 159(2), pages 593-615, January.

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