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

Oded Stark and Junsen Zhang

No 82, Economics Series from Institute for Advanced Studies

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.

Keywords: Parental altruism; Inter-vivos transfers (search for similar items in EconPapers)
JEL-codes: D10 D31 D63 D64 (search for similar items in EconPapers)
Date: 2000-07
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http://www.ihs.ac.at/publications/eco/es-82.pdf First version, 2000 (application/pdf)

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Journal Article: Counter-compensatory inter-vivos transfers and parental altruism: compatibility or orthogonality? (2002) Downloads
Working Paper: Counter-Compensatory Inter-Vivos Transfers and Parental Altruism: Compatibility or Orthogonality? (2000)
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