A semiparametric alternative to the Heckman correction: application with left-censored data on parental transfers

Lu Wang, Yixiao Jiang and Zhaochen He
Additional contact information
Lu Wang: Quora, Inc.
Zhaochen He: Christopher Newport University

Empirical Economics, 2024, vol. 66, issue 4, No 14, 1847-1866

Abstract: Abstract Using a semiparametric estimator developed by Klein and Vella (J Appl Econom 24(5):735–762, 2009b), we study the motives for parental wealth transfers to living children using left-censored data from the Health and Retirement Study. We confirm the presence of heteroskedastic errors in our data and show that the inverse Mills ratio approach employed by the Heckman correction would be biased in such a setting. Using the more flexible semiparametic approach, we find evidence of a nonlinear relationship between amount of inter vivo transfers and recipient children’s household incomes, suggesting that parents’ motives for transferring wealth may vary depending on their child’s income level.

Keywords: Inter vivos transfers; Heteroskedasticity; Earning income tax credit (EITC) (search for similar items in EconPapers)
JEL-codes: C14 C34 D64 H31 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s00181-023-02507-6

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