Counter-Compensatory Inter-Vivos Transfers and Parental Altruism: Compatibility or Orthogonality?

Stark, Oded and Zhang, Junsen (July 2000) Counter-Compensatory Inter-Vivos Transfers and Parental Altruism: Compatibility or Orthogonality? IHS Economics Series 82

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Abstract: The intersection of the standard altruism hypothesis with the quite strong evidence that bequests tend to be equal suggests that inter-vivos transfers should be strongly compensatory. Yet the available evidence is not in congruence with this implication. It has therefore been inferred that the motive underlying inter-vivos transfers is not parental altruism. In this paper we present an argument showing why parents who are equally altruistic toward their children optimally transfer more to the child whose earnings are higher. We show that rather than being orthogonal to parental altruism, counter-compensating transfers emanate from such altruism. A key point in the analysis is that parents and children are interlinked in a rich web of (vertical and possibly horizontal) transfers, reverse transfers, direct transfers, and indirect transfers.;

Item Type: IHS Series
Keywords: 'Parental altruism' 'Inter-vivos transfers'
Classification Codes (e.g. JEL): D10, D31, D63, D64
Status: Published
Date Deposited: 26 Sep 2014 10:37
Last Modified: 22 Jul 2017 08:31
URI: http://irihs.ihs.ac.at/id/eprint/1269

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