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Intergenerational Altruism and Transfers of Time and Money: A Life-cycle Perspective

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  • Uta Bolt

    (University College London and Institute for Fiscal Studies)

  • Eric French

    (University College London and Institute for Fiscal Studies)

  • Jamie Hentall Maccuish

    (University College London)

  • Cormac O’Dea

    (Yale University and Institute for Fiscal Studies)

Abstract

Parental investments in children can take one of three broad forms: (1) Time investments during childhood and adolescence that aid child development, and in particular cognitive ability; (2) educational investments that improve school quality and hence educational outcomes; (3) cash investments in the form of inter vivos transfers and bequests. We develop a dynastic model of household decision-making with intergenerational altruism that nests a child production function, incorporates all three of these types of investments, and allows us to quantify their relative importance and estimate the strength of intergenerational altruism. Using British cohort data that follows individuals from birth to retirement, we ?nd that around 40% of di?erences in average lifetime income by paternal education are explained by ability at age 7, around 40% by subsequent divergence in ability and di?erent educational outcomes, and around 20% by inter vivos transfers and bequests received so far.

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  • Uta Bolt & Eric French & Jamie Hentall Maccuish & Cormac O’Dea, 2018. "Intergenerational Altruism and Transfers of Time and Money: A Life-cycle Perspective," Working Papers wp379, University of Michigan, Michigan Retirement Research Center.
    • Handle: RePEc:mrr:papers:wp379
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    JEL classification:

    • J00 - Labor and Demographic Economics - - General - - - General
    • I0 - Health, Education, and Welfare - - General

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