Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Gothenburg, Department of Economics

No 31: Compensatory inter vivos gifts

Stefan Hochguertel and Henry Ohlsson
Additional contact information
Stefan Hochguertel: European University Institute, Postal: Via dei Roccettini 9 , I– 500 16 San Domenico di Fiesole (Fl) Italy,
Henry Ohlsson: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Box 640, SE 405 30 GÖTEBORG

Abstract: Empirical studies of intergenerational transfers usually find that bequests are equally divided among heirs while inter vivos gifts tend to be compensatory. Using the 1992 and 1994 waves of the Health and Retirement Study, we find that only 4% of parents who give, divide their gifts equally among their children. Estimating probit models, using family panels, we find that gifts are compensatory in the sense that a child is more likely to receive a gift if she works fewer hours and has lower income than than her brothers and sisters. These results carry over to the amounts given. Fixed effects Tobit estimations show that the fewer hours a child works and the lower her income is, the more the parents give. Gifts are compensatory. The empirical results are, therefore, consistent with the predictions of the altruistic model of intergenerational transfers.

Keywords: inter vivos gifts; altruism; compensatory transfers

JEL-codes: D10; D64; D91

39 pages, October 31, 2000

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Published as
Stefan Hochguertel and Henry Ohlsson, (2009), 'Compensatory inter vivos gifts', Journal of Applied Econometrics, vol 24, no 6, pages 993-1023

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