Gifts, Lies and Bequests
AbstractRecent empirical work on intergenerational transfers has shown that: i) parents prefer to transfer resources to their children using bequests rather than inter vivos transfers (gifts), and ii) bequests tend to be divided equally, while gifts tend to be directed towards the less well-off children. In this note, we present a theoretical model of the altruistic family with heterogeneous children which does not contradict either i) or ii). In our setting, i) follows because bequests are more e¢cient than gifts: these are negatively related to the children’s reported income (true income cannot be observed) and therefore distort the effort supply decisions as well as inducing underreporting. As for ii), we propose two arguments. First, market imperfections make bequests, which come late in life, a rather ineffective redistributive tool, so that it may be pointless to differentiate them. Second, imposing the constraint that bequest have to be equal is not necessarily costly in welfare terms and permits to avoid the the psychic costs or the loss of reputation associated with unequal giving.
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Bibliographic InfoPaper provided by CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY in its series CHILD Working Papers with number wp01_00.
Length: 22 pages
Date of creation: Oct 2000
Date of revision:
altruism; inter vivos transfers; bequests;
Find related papers by JEL classification:
- D10 - Microeconomics - - Household Behavior - - - General
- J10 - Labor and Demographic Economics - - Demographic Economics - - - General
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- Stefan Hochguertal & Henry Ohlsson, 2000.
"Inter Vivos Gifts: Compensatory or Equal Sharing?,"
Econometric Society World Congress 2000 Contributed Papers
0699, Econometric Society.
- Stefan Hochguertel & Henry Ohlsson, 2001. "Compensatory Inter Vivos Gifts," Macroeconomics 0012006, EconWPA.
- Hochguertel , Stefan & Ohlsson, Henry, 2000. "Compensatory inter vivos gifts," Working Papers in Economics 31, University of Gothenburg, Department of Economics.
- Stefan Hochguertel & Henry Ohlsson, 2000. "Compensatory inter vivos gifts," Economics Working Paper Archive wp_319, Levy Economics Institute, The.
- Stefan Hochguertel & Henry Ohlsson, 2007. "Compensatory Inter Vivos Gifts," Tinbergen Institute Discussion Papers 07-074/3, Tinbergen Institute.
- Marta Melguizo Garde, 2007. "La motivación de las transmisiones lucrativas entre generaciones de una familia: modelos teóricos y evidencia empírica," Hacienda Pública Española, IEF, vol. 181(2), pages 81-118, June.
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