Parental Altruism and Inter Vivos Transfers: Theory and Evidence / Joseph G. Altonji, Fumio Hayashi, Laurence Kotlikoff.

Format:

Book

Author/Creator:

Altonji, Joseph G.

Contributor:

National Bureau of Economic Research.

Hayashi, Fumio.

Kotlikoff, Laurence.

Series:

Working Paper Series (National Bureau of Economic Research) no. w5378.

NBER working paper series no. w5378

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Parental Altruism and Inter Vivos Transfers

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1995.

Summary:

This paper uses PSID data on the extended family to test whether inter vivos transfers from parents to children are motivated by altruism. Specifically, the paper tests whether an increase by one dollar in the income of parents actively making transfers to a child coupled with a one dollar reduction in that child's income results in the parents increasing their transfer to the child by one dollar. This restriction on parental and child transfer-income derivatives is derived for the standard altruism model augmented to include uncertain and liquidity constraints. These additional elements pin down the timing of inter vivos transfers. The paper's method of estimating income-transfer derivatives takes into account unobserved heterogeneity across families in the degree of altruism. The findings strongly reject the altruism hypothesis. Redistributing one dollar from a recipient child to donor parents leads to less than a 13 cent increase in the parents' transfer to the child -- far less than the one dollar increase implied by altruism.

Notes:

Print version record

December 1995.