IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Dynamic Aspects of Family Transfers

  • Kathleen McGarry

Each year parents transfer a great deal of money to their adult children. While intuition might suggest that these transfers are altruistic and made out of concern for the well-being of the children, empirical tests of the model have consistently yielded negative results. However, an important limitation in these sorts of studies and of our understanding of transfers in general has stemmed our inability to observe transfers over time. Estimates of patterns in a single cross section necessarily miss important aspects of behavior. In this paper I expand on the static altruistic model and posit a dynamic model in which parents use current observations on the incomes of their children to update their expectations regarding future incomes and desired future transfers. I then draw on data spanning a 17 year period to examine the dynamic aspects of transfer behavior. I find substantial change across periods in recipiency, large differences across children within the family, and a strong negative correlation between inter vivos transfers and the transitory incomes of the recipients. This evidence suggests that dynamic models can provide insights into transfer behavior that are impossible to obtain in a static context.

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.nber.org/papers/w18446.pdf
Download Restriction: no

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18446.

as
in new window

Length:
Date of creation: Oct 2012
Date of revision:
Publication status: published as Kathleen McGarry, 2016. "Dynamic aspects of family transfers," Journal of Public Economics, vol 137, pages 1-13.
Handle: RePEc:nbr:nberwo:18446
Note: AG LS PE
Contact details of provider: Postal:
National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.

Phone: 617-868-3900
Web page: http://www.nber.org
Email:


More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
  2. Greg Kaplan, 2010. "Moving back home: insurance against labor market risk," Working Papers 677, Federal Reserve Bank of Minneapolis.
  3. Donald Cox, 1990. "Intergenerational Transfers and Liquidity Constraints," The Quarterly Journal of Economics, Oxford University Press, vol. 105(1), pages 187-217.
  4. William G. Gale & John Karl Scholz, 1991. "Intergenerational Transfers and the Accumulation of Wealth," UCLA Economics Working Papers 624, UCLA Department of Economics.
  5. Neil Bruce & Michael Waldman, 1986. "The Rotten-Kid Theorem Meets the Samaritan's Dilemma," UCLA Economics Working Papers 402, UCLA Department of Economics.
  6. Kathleen McGarry, 2012. "Dynamic Aspects of Family Transfers," NBER Working Papers 18446, National Bureau of Economic Research, Inc.
  7. Markus Mobius & Adam Szeidl, 2007. "Trust and Social Collateral," NBER Working Papers 13126, National Bureau of Economic Research, Inc.
  8. 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.
  9. Wilhelm, M.O., 1990. "Bequest Behavior And The Effect Of Heirs' Earnings: Testing The Altruistic Model Of Bequests," Papers 9-90-12, Pennsylvania State - Department of Economics.
  10. repec:dgr:uvatin:20070074 is not listed on IDEAS
  11. Rosenzweig, Mark R & Wolpin, Kenneth I, 1994. "Parental and Public Transfers to Young Women and Their Children," American Economic Review, American Economic Association, vol. 84(5), pages 1195-1212, December.
  12. Stefan Hochguertel & Henry Ohlsson, 2001. "Compensatory Inter Vivos Gifts," Macroeconomics 0012006, EconWPA.
  13. Cox, Donald & Rank, Mark R, 1992. "Inter-vivos Transfers and Intergenerational Exchange," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 305-14, May.
  14. B. Douglas Bernheim & Sergei Severinov, 2003. "Bequests as Signals: An Explanation for the Equal Division Puzzle," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 733-764, August.
  15. Steven J. Haider & Kathleen M. McGarry, 2012. "Parental Investments in College and Later Cash Transfers," NBER Working Papers 18485, National Bureau of Economic Research, Inc.
  16. Davies, James B, 1981. "Uncertain Lifetime, Consumption, and Dissaving in Retirement," Journal of Political Economy, University of Chicago Press, vol. 89(3), pages 561-77, June.
  17. Poterba, James, 2001. "Estate and gift taxes and incentives for inter vivos giving in the US," Journal of Public Economics, Elsevier, vol. 79(1), pages 237-264, January.
  18. Ingela Alger & Jörgen Weibull, 2009. "Kinship, Incentives and Evolution," Working Papers hal-00435431, HAL.
  19. Joulfaian, David, 2005. "Choosing between gifts and bequests: How taxes affect the timing of wealth transfers," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2069-2091, December.
  20. Bergstrom, Theodore C, 1989. "A Fresh Look at the Rotten Kid Theorem--and Other Household Mysteries," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1138-59, October.
  21. Kathleen McGarry, 2000. "Testing Parental Altruism: Implications of a Dynamic Model," NBER Working Papers 7593, National Bureau of Economic Research, Inc.
  22. Cox, Donald & Rank, Mark R, 1995. "Erratum [Inter-vivos Transfers and Intergenerational Exchange]," The Review of Economics and Statistics, MIT Press, vol. 77(3), pages 569, August.
  23. Cox, Donald & Jappelli, Tullio, 1990. "Credit Rationing and Private Transfers: Evidence from Survey Data," The Review of Economics and Statistics, MIT Press, vol. 72(3), pages 445-54, August.
  24. McGarry, Kathleen, 2001. "The cost of equality: unequal bequests and tax avoidance," Journal of Public Economics, Elsevier, vol. 79(1), pages 179-204, January.
Full references (including those not matched with items on IDEAS)

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:nbr:nberwo:18446. 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: ()

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.