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Compensatory inter vivos gifts

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Author Info
Hochguertel , Stefan (European University Institute)
Ohlsson, Henry (Department of Economics, School of Economics and Commercial Law, Göteborg University)

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Abstract

Empirical studies of intergenerational transfers usually find that bequests are equally divided among heirs while inter vivos gifts tend to be compensatory. Using the 1992 and 1994 waves of the Health and Retirement Study, we find that only 4% of parents who give, divide their gifts equally among their children. Estimating probit models, using family panels, we find that gifts are compensatory in the sense that a child is more likely to receive a gift if she works fewer hours and has lower income than than her brothers and sisters. These results carry over to the amounts given. Fixed effects Tobit estimations show that the fewer hours a child works and the lower her income is, the more the parents give. Gifts are compensatory. The empirical results are, therefore, consistent with the predictions of the altruistic model of intergenerational transfers.

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Publisher Info
Paper provided by Göteborg University, Department of Economics in its series Working Papers in Economics with number 31.

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Length: 39 pages
Date of creation: 31 Oct 2000
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Handle: RePEc:hhs:gunwpe:0031

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Postal: Department of Economics, School of Business, Economics and Law, Göteborg University Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Related research
Keywords: inter vivos gifts altruism compensatory transfers

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Find related papers by JEL classification:
D10 - Microeconomics - - Household Behavior - - - General
D64 - Microeconomics - - Welfare Economics - - - Altruism
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Francois-Charles Wolff & Seymour Spilerman & Claudine Attias-Donfut, 2005. "Do Parents Help More their Less Well-Off Children? Evidence from a Sample of Migrants to France," Microeconomics 0504001, EconWPA. [Downloadable!]
  2. Audrey Light & Kathleen McGarry, 2004. "Why Parents Play Favorites: Explanations for Unequal Bequests," American Economic Review, American Economic Association, vol. 94(5), pages 1669-1681, December. [Downloadable!] (restricted)
  3. Audrey Light & Kathleen McGarry, 2003. "Why Parents Play Favorites: Explanations for Unequal Bequests," NBER Working Papers 9745, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Pierre Pestieau, 2002. "The Role of Gift and Estate Transfers in the United States and in Europe," CREPP Working Papers 0202, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège. [Downloadable!]
  5. Audrey Light & Kathleen McGarry, 2003. "Why Parents Play Favorites: Explanations for Unequal Bequests," Working Papers 03-01, Ohio State University, Department of Economics. [Downloadable!]
  6. Nordblom, Katarina & Ohlsson, Henry, 2002. "BEQUESTS, GIFTS, AND EDUCATION Swedish evidence on parents’ transfer behavior," Working Papers in Economics 69, Göteborg University, Department of Economics. [Downloadable!]
  7. Donald Cox & Beth J. Soldo, 2004. "Motivation for Money and Care that Adult Children Provide for Parents: Evidence from "Point-Blank" Survey Questions," Working Papers, Center for Retirement Research at Boston College 2004-17, Center for Retirement Research. [Downloadable!]
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