Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2007-09-24 Number: 07-074/3 Author-Name: Stefan Hochguertel Author-Email: shochguertel@feweb.vu.nl Author-Workplace-Name: VU University Amsterdam Author-Name: Henry Ohlsson Author-Email: henry.ohlsson@nek.uu.se Author-Workplace-Name: Uppsala University Title: Compensatory Inter Vivos Gifts Abstract: This discussion paper led to a publication in Journal of Applied Econometrics, 24(6), 993-1023.Parents’ transfer motives are important for understanding, e.g., macroeconomics, income (re)distribution, savings, and public finance. Using data from six biennial waves of the Health and Retirement Study 1992–2002, we estimate grouped tobit-type latent variable models with multi-level error components. First, we find that inter vivos transfers from parents to children are gifts, and not temporary help to overcome liquidity constraints. Second, inter vivos gifts are compensatory in the sense that life-time poorer children will receive higher transfers than their life-time richer siblings. Third, inter vivos gifts do not, however, make up the entire difference in life-time incomes. Classification-JEL: D100; D640; D910 Keywords: inter vivos gifts; compensatory transfers; liquidity constraints; altruism; exchange File-Url: https://papers.tinbergen.nl/07074.pdf File-Format: application/pdf File-Size: 219057 bytes Handle: RePEc:tin:wpaper:20070074