The Nature of Two-directional Intergenerational Transfers of Money and Time: An Empirical Analysis

Abstract

Since the 1970s, resource transfers among family members and across generations have been paid particular attention by economists. This has, in part, been motivated by the difficulty the life-cycle permanent income theory has faced in explaining the saving behaviour of households (Menchik and David, 1983; King, 1985; Kotlikoff, 1987; Hayashi, Ando and Ferris, 1988; and Hurd, 1987, 1989, 1990). Intergenerational transfers of resources have been found to play an important role in capital accumulation and distribution of income (Kotlikoff and Summers, 1981, 1988; and Gale and Scholz, 1994), and in consumption smoothing (Kan, 1996).

Kan thanks CORE, especially Luc Bauwens, for hospitality and generous research support during his stay, and gratefully acknowledges financial support by the National Science Council of Taiwan. Suggestions by Terry Gorman, Heracles Polemarchakis and Jean-Pierre Vidal, by participants in the 1993 ASSET Conference (Barcelona, Spain) and the 1994 Winter Meetings of the Econometric Society (Boston, USA), and in seminars at the Institute of Economics (Academia Sinica, Taiwan), CORE and University College London have greatly improved our chapter. Thanks also go to Kristin Butcher, Don Cox and Hans H. Haller, for useful comments on earlier versions of the chapter. Comments and suggestions from Anne Laferrère, as referee, have led to further improvements. Ioannides gratefully acknowledges support from the National Science Foundation and thanks the LSE’s Economics Department and the Centre for Economic Performance for their hospitality during his stay there in 1994.

The data used in the estimations of this paper have been archived with the Survey Research Center of the University of Michigan.