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The magnitude and correlates of inter-vivos transfers in the UK

  • Eleni Karagiannaki
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    This paper uses data from the British Household Panel Survey and the Attitudes to Inheritances Survey to estimate the magnitude of and the factors that are correlated with private inter-household transfers from parents to their adult children in the UK. Our evidence suggests that inter vivos transfers in the UK are fairly common although regular financial transfers may be less so. AIS suggests an aggregate value of all gifts received so far in people’s lifetimes of around £83 billion in 2004. This is about one tenth of the aggregate value of inheritances reported to the same survey, or about 2.3 per cent of total wealth at the time. One section of BHPS implies an annual flow of parental transfers of only around £1.1 billion, or 4 per cent of the flow of inheritances, but other parts of the same survey imply a much greater prevalence of transfers. It appears that none of the available datasets captures the whole picture. Consistently, however, the surveys suggest that financial transfers are negatively associated with age and the income of the recipient indicating that parental transfers are reach children when help is most needed, and most for those with greater needs. However, it is the parents with greater resources who are able to do this, meaning that the process tends to reinforce intergenerational links.

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    File URL: http://eprints.lse.ac.uk/43898/
    File Function: Open access version.
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    Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 43898.

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    Length: 30 pages
    Date of creation: Jun 2011
    Date of revision:
    Handle: RePEc:ehl:lserod:43898
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    1. Joseph G. Altonji & Fumio Hayashi & Laurence Kotlikoff, . "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," IPR working papers 95-22, Institute for Policy Resarch at Northwestern University.
    2. Wolff, Edward N. & Gittleman, Maury, 2011. "Inheritances and the distribution of wealth or whatever happened to the great inheritance boom?," Working Paper Series 1300, European Central Bank.
    3. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-93, Nov.-Dec..
    4. Kathleen McGarry, 2000. "Testing Parental Altruism: Implications of a Dynamic Model," NBER Working Papers 7593, National Bureau of Economic Research, Inc.
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