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The division of parental transfers in Europe

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  • Javier Olivera Angulo

    (University College Dublin)

Abstract

In this paper we explore the patterns of the division of inter-vivos financial transfers from parents to adult children in a sample of 12 European countries. We exploit two waves of the Survey of Health, Aging, and Retirement in Europe (SHARE) for 50+. Contrary to previous studies, we find a higher frequency of parents dividing equally their transfers. We argue that altruistic parents are also concerned with norms of equal division, and hence don’t fully offset child income differences. The parents start to give larger transfers to poorer children if the child income inequality becomes unbearable from the parent’s view. We find econometric evidence suggesting this behaviour under different specifications and strategies. Furthermore, contextual variables like the gini coefficient and pension expenditures help to explain country differences with respect to the division of inter-vivos transfers. The lower frequency of equal division found in studies with American data may respond to the higher inequality and relatively lower pension expenditures in US.

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File URL: http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201220.pdf
File Function: First version, 2012
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Bibliographic Info

Paper provided by Geary Institute, University College Dublin in its series Working Papers with number 201220.

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Length: 27 pages
Date of creation: 25 Sep 2012
Date of revision:
Handle: RePEc:ucd:wpaper:201220

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Keywords: inter-vivos transfers; altruism; equal division; Europe;

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  1. Stefan Hochguertel & Henry Ohlsson, 2000. "Compensatory inter vivos gifts," Economics Working Paper Archive wp_319, Levy Economics Institute.
  2. Lundholm, Michael & Ohlsson, Henry, 2000. "Post mortem reputation, compensatory gifts and equal bequests," Economics Letters, Elsevier, vol. 68(2), pages 165-171, August.
  3. Ernesto Villanueva, 2001. "Parental altruism under imperfect information: Theory and evidence," Economics Working Papers 566, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2002.
  4. Wolff, Francois-Charles, 2006. "Microeconomic models of family transfers," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
  5. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 115-156, 04.
  6. Edward C. Norton & Courtney Harold Van Houtven, 2006. "Inter-vivos Transfers and Exchange," Southern Economic Journal, Southern Economic Association, vol. 73(1), pages 157–172, July.
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