IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Motives for Transfers from Parents to Children: Tests with First-Time Homeowners’ Data

  • Christophe Kolodziejczyk

    (AKF, Danish Institute of Governmental Research)

  • Søren Leth-Petersen

    (Department of Economics, University of Copenhagen)

There are good theoretical reasons why transfers from parents are likely to be important around the time of the first home purchase. Transactions costs associated with trading houses make people with increasing income paths prefer to buy a house that is more expensive than what matches their current income. This together with a down-payment constraint make some first-time house owners borrow to the limit and run down liquid assets at purchase thereby making them vulnerable to adverse income shocks. Intergenerational transfers can alleviate these constraints. Moreover, previous papers have suggested that transfers from parents to children are significant exactly around the time where children buy their first home. Using a panel data set issued from Danish administrative registers with information about wealth of a sample of first-time homeowners and their parents, we document that child and parent resources, house value as well as financial resources are correlated. We then go on to test if there are direct parental transfers targeted to the purchase of the house, and in case of an unemployment spell during the years after the purchase where children typically hold little liquid assets. We also test whether children consider parental wealth as part of their own precautionary savings. We do not find strong evidence of any of these hypotheses.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.econ.ku.dk/cam/wp0910/2010-01.pdf/
Our checks indicate that this address may not be valid because: 404 Not Found. If this is indeed the case, please notify (Thomas Hoffmann)


Download Restriction: no

Paper provided by University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics in its series CAM Working Papers with number 2010-01.

as
in new window

Length: 16 pages
Date of creation: Feb 2010
Date of revision:
Handle: RePEc:kud:kuieca:2010_01
Contact details of provider: Postal: Øster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark
Phone: (45) 35 32 30 74
Fax: +45 35 32 30 00
Web page: http://www.econ.ku.dk/CAM/
Email:


More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:kud:kuieca:2010_01. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Hoffmann)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.