Compensatory Inter Vivos Gifts
Levy Institute Working Paper No. 319
Tinbergen Institute Discussion Paper No. 2007-074/3
Posted: 11 Jan 2001
Date Written: September 2007
Abstract
Parents' transfer motives are important for understanding, e.g., macroeconomics, income (re)distribution, savings, and public finance. Using data from six biennial waves of the Health and Retirement Study 1992-2002, we estimate grouped tobit-type latent variable models with multi-level error components. First, we find that inter vivos transfers from parents to children are gifts, and not temporary help to overcome liquidity constraints. Second, inter vivos gifts are compensatory in the sense that life-time poorer children will receive higher transfers than their life-time richer siblings. Third, inter vivos gifts do not, however, make up the entire difference in life-time incomes.
Keywords: inter vivos gifts, compensatory transfers, liquidity constraints, altruism, exchange
JEL Classification: D100, D640, D910
Suggested Citation: Suggested Citation