When you need it or when I die? Timing of monetary transfers from parents to children

Giacomo Pasini, Rob Alessie and Adriaan Kalwij

No 2016:34, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: This paper investigates the timing of wealth transfers between generations. We develop an overlapping generations model in which each generation can borrow against its future income but not against expected bequest. As a result, generations relatively poorer than their parents may end up not smoothing consumption. We prove that if wealth transfers can take place earlier in life, then each generation smooths consumption despite the constraint on borrowing and the first best solution is restored. The model implies that parents transfer resources when the children are credit constrained. This implication is tested using Dutch survey data on households' intentions to make intervivos transfers matched with administrative data that allow to construct a measure of the probability of being in need of a transfer. All in all, the paper highlights the importance of intervivos transfers as a device that households can resort to in order to mitigate inter-generational wealth inequalities.

Keywords: intervivos transfers; credit constraints; overlapping generations (search for similar items in EconPapers)
JEL-codes: D12 D13 D91 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2016
New Economics Papers: this item is included in nep-age, nep-dge and nep-eur
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Related works:
Journal Article: When you need it or when I die? Timing of monetary transfers from parents to children (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ven:wpaper:2016:34

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