Intergenerational Transfers and Liquidity Constraints

Cox, Donald

doi:10.2307/2937825

Cited by 230 publications

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“…Therefore, the parents' equilibrium choice of assistance depends on the probability of imitation, p, and on the expected transfer, Y, received from children, so that the unique ] ] ] ] solution X may be written as X 5X(Y,p). Cox and Stark (1996) prove that the equilibrium choice X is ] s increasing in the probability of imitation p since ≠X / ≠p 5 U /pEU . 0.…”

Section: The Demonstration Effect Modelmentioning

confidence: 99%

“…The model of upstream transfers developed by Bergstrom and Stark (1993) and Cox and Stark (1996) includes imitative behavior in the expected utility maximization and involves three generations: grandparents G, parents P, and children K. According to the demonstration theory, P give to G in anticipation that when they, the P, become G, and the K become P, the K will treat P in the same way that P treat G.…”

Section: The Demonstration Effect Modelmentioning

confidence: 99%

“…In the exchange model, financial transfers from parents correspond to the purchase of services and attention provided by children (Cox, 1987). There may also be a repayment by children to their aging parents for the support the former received earlier in the life course (Cox, 1990;Cigno, 1993). Accounting for the motivation underlying inter vivos transfers has fundamental implications for the redistributive outcomes of public transfers programs, since private gifts fully offset the effect of public income redistribution under altruism.…”

Section: Introductionmentioning

confidence: 99%

“…The paper proceeds as follows. Section 2 briefly describes the model of imitative intergenerational transfers proposed by Bergstrom and Stark (1993) and Cox and Stark (1996). Section 3 compares the risky returns from engagement in demonstration with the sure return to savings.…”

Section: Introductionmentioning

confidence: 99%

“…The motive for upstream transfers would no longer be a repayment, but setting an example to the young generation so that in future years the latter will replicate the behavior of their parents. The model generates testable predictions described in greater detail by Cox and Stark (1996), such that parents are expected to help their own parents more through contact and visits when their 1 young children are around. The policy implications of this preference shaping hypothesis are important, since the impact of public allowances on current transfers may affect the expectations and incidence of future private assistance.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Shaping intergenerational relationships: the demonstration effect

Jellal¹,

Wolff²

2000

Economics Letters

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According to the demonstration effect theory, parents make intergenerational transfers to their elders in order to elicit a symmetric future behavior from their children. In this paper we show that upstream transfers are expected to increase with low returns from alternative financial assets and with the donor's life expectancy. The latter effect creates a greater incentive for daughters to care for parents.

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Section: The Demonstration Effect Modelmentioning

confidence: 99%

Section: The Demonstration Effect Modelmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Shaping intergenerational relationships: the demonstration effect

Jellal¹,

Wolff²

2000

Economics Letters

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Do the Rich Save More? A New View Based on Intergenerational Transfers

Fan¹

2006

Southern Economic Journal

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Do richer people have higher saving rates? The short‐run and long‐run consumption functions have different answers to this question, which results in the “consumption puzzle” that was a focus of macroeconomic research in the 1950s and 1960s. In a recent empirical contribution, Dynan, Skinner, and Zeldes (2004) revive this old question and make this “consumption puzzle” more intriguing, by showing that the average propensity to consume decreases not only with current income but also with lifetime income. This paper provides a model that helps resolve this puzzle from an intergenerational perspective.

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Compensatory inter vivos gifts

Hochguertel

Ohlsson

2009

J of Applied Econometrics

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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 censored regression models with nested multilevel error components. First, we interpret our findings that inter vivos transfers from parents to children are gifts, rather than temporary help to overcome liquidity constraints. Second, inter vivos gifts are compensatory in the sense that lifetime poorer children will receive higher transfers than their lifetime richer siblings. Third, inter vivos gifts do not, however, make up the entire difference in lifetime incomes. Copyright © 2009 John Wiley & Sons, Ltd.

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Intergenerational Transfers and Liquidity Constraints

Cited by 230 publications

References 0 publications

Shaping intergenerational relationships: the demonstration effect

Shaping intergenerational relationships: the demonstration effect

Do the Rich Save More? A New View Based on Intergenerational Transfers

Compensatory inter vivos gifts

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