Recent work by a number of economists has opened a debate about the role played by intergenerational transfers. Using the new Health and Retirement Survey (HRS), the authors are better able to address the issues involved. Contrary to the current literature on bequests, they do not find that parents give transfers equally to all children. Rather, they find that in the case of inter vivos transfers, respondents give greater financial assistance to their less well-off children, relative to their children with higher incomes. Financial transfers to elderly parents are also found to be negatively related to the (potential) recipients' income. These results hold for both the incidence of transfers and for the amounts. Additionally, the authors allow for unobserved differences across families by estimating fixed effect models and find their results to be robust to these specifications. Thus they fail to reject altruism as a possible motivation for transfers. A comparison of the HRS transfer data to other survey data demonstrates that the HRS is potentially quite useful for research on transfer behavior.
Originally published in: The Journal of Human Resources, v. 30, suppl., 1995, pp. S184-S226.
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