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Compensatory Inter Vivos Gifts

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  • Stefan Hochguertel

    ()
    (VU University Amsterdam)

  • Henry Ohlsson

    ()
    (Uppsala University)

Abstract

This discussion paper led to a publication in Journal of Applied Econometrics , 24(6), 993-1023.Parents’ transfer motives are important for understanding, e.g., macroeconomics, income (re)distribution, savings, and public finance. Using data from six biennial waves of the Health and Retirement Study 1992–2002, we estimate grouped tobit-type latent variable models with multi-level error components. First, we find that inter vivos transfers from parents to children are gifts, and not temporary help to overcome liquidity constraints. Second, inter vivos gifts are compensatory in the sense that life-time poorer children will receive higher transfers than their life-time richer siblings. Third, inter vivos gifts do not, however, make up the entire difference in life-time incomes.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 07-074/3.

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Date of creation: 24 Sep 2007
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Handle: RePEc:dgr:uvatin:20070074

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Keywords: inter vivos gifts; compensatory transfers; liquidity constraints; altruism; exchange;

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