Unequal Giving: Monetary Gifts to Children Across Countries and Over Time
Money parents give their adult children may be important for the financing of a child's education or a first home, relaxing binding credit constraints or responding to a transitory income shock. Financial transfers however, may extend economic disparities across generations if the wealthy transfer considerable resources to their children while middle class and poor households do not. In this paper, the authors first examine annual gifts of money from parents to adult children in the United States and ten European countries using the 2004 waves of the Health and Retirement Study (HRS) and Survey of Health, Ageing and Retirement in Europe (SHARE). Second, utilizing the long panel of the HRS, the authors study the long-run behavior of parental monetary giving to children across families and within a family. This paper found that in all countries, some parents gave money to children, many did not, the amount was low, about 500 Euros annually per child, and varied by parental socio-economic status and public social expenditures. In the short-term parents in the U.S. gave money to a child to compensate for low earnings or satisfy an immediate need such as schooling. Over sixteen years, parents gave an average of about $38,000 to all their children, five percent gave over $140,000 and gave persistently. With time, the amount of money children in the same family received became more equal and a child's level of education was one of the few remaining sources of differences in money given to children. Overall, the annual amount of money parents gave adult children in any country was not enough to affect the distribution of resources within or between families in the next generation although the timing of transfers for schooling or housing may have a significant impact on an individual child. Annual parental transfers for college age children in school in the U.S. were substantially higher than average transfers to all children. The effect of parental transfers for higher education on intergenerational mobility in the U.S. will depend in part upon whether this financing is essential in the schooling decision.
|Date of creation:||Dec 2009|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.rand.org/pubs/
More information through EDIRC
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.:
- McGarry, Kathleen, 2001. "The cost of equality: unequal bequests and tax avoidance," Journal of Public Economics, Elsevier, vol. 79(1), pages 179-204, January.
- Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
- Guiso, Luigi & Jappelli, Tullio, 2002.
"Private Transfers, Borrowing Constraints and the Timing of Homeownership,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 34(2), pages 315-39, May.
- Guiso, Luigi & Jappelli, Tullio, 1998. "Private Transfers, Borrowing Constraints and the Timing of Homeownership," CEPR Discussion Papers 2050, C.E.P.R. Discussion Papers.
- Luigi Guiso & Tullio Jappelli, 1999. "Private Transfers, Borrowing Constraints and the Timing of Homeownership," CSEF Working Papers 17, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Bernheim, B Douglas & Shleifer, Andrei & Summers, Lawrence H, 1986.
"The Strategic Bequest Motive,"
Journal of Labor Economics,
University of Chicago Press, vol. 4(3), pages S151-82, July.
- McGarry, K. & Schoeni, R.F., 1995.
"Transfer Behavior With the Family: Results from the Asset and Health Dynamics Survey,"
95-09, RAND - Labor and Population Program.
- Kathleen McGarry & Robert F. Schoeni, 1995. "Transfer Behavior within the Family: Results from the Asset and Health Dynamics Survey," NBER Working Papers 5099, National Bureau of Economic Research, Inc.
- Chiuri, Maria Concetta & Jappelli, Tullio, 2003.
"Financial market imperfections and home ownership: A comparative study,"
European Economic Review,
Elsevier, vol. 47(5), pages 857-875, October.
- Maria Concetta Chiuri & Tullio Jappelli, 2000. "Financial Market Imperfections and Home Ownership: A Comparative Study," CSEF Working Papers 44, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Dec 2000.
- Chiuri, Maria Concetta & Jappelli, Tullio, 2001. "Financial Market Imperfections and Home Ownership: A Comparative Study," CEPR Discussion Papers 2717, C.E.P.R. Discussion Papers.
- Barro, Robert J., 1974.
"Are Government Bonds Net Wealth?,"
3451399, Harvard University Department of Economics.
- William G. Gale & John Karl Scholz, 1991.
"Intergenerational Transfers and the Accumulation of Wealth,"
UCLA Economics Working Papers
624, UCLA Department of Economics.
- William G. Gale & John Karl Scholz, 1994. "Intergenerational Transfers and the Accumulation of Wealth," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 145-160, Fall.
- W. G. Gale & J. K. Scholz, . "Intergenerational transfers and the accumulation of wealth," Institute for Research on Poverty Discussion Papers 1019-93, University of Wisconsin Institute for Research on Poverty.
- 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.
- McGarry, K & Schoeni, R-F, 1996. "Measurement and the Redistribution of Resources Within the Family," Papers 96-11, RAND - Reprint Series.
- Gary S. Becker, 1974.
"A Theory of Social Interactions,"
NBER Working Papers
0042, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:ran:wpaper:723. 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: (Benson Wong)
If references are entirely missing, you can add them using this form.