Abstract
In France, a substantial share of public financial transfers takes the form of collective support for individuals affected by events in their private and working life which entail new needs or a drop in income. Conversely, private transfers, from parents to children in this case, are often viewed as a uniform whole which does not respond mechanically to well-identified needs and which depends on the generosity of the givers.
This chapter shows that transfers from parents to children are a form of private solidarity in the sense that they too are made in response to “landmark” events in private or working life. Each type of private transfer made by parents is correlated with a specific event or need in their children’s lives. For example, financial support (for a limited amount) provide a means to help children when they are students, or when their financial situation deteriorates (following separation, job loss, etc.). Gifts may also be made to help the children buy a home. Last, support in “time” is more often given after the birth of the first child.
Julien Navaux received a grant for this study from the European Research Council (ERC Starting Grant DU 283953).
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- 1.
- 2.
The figure for the UK is from 2010; the figure for Germany is from 2009.
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However, there is an abundant literature showing that ownership of assets at the time of death is not necessary unintentional. Some parents may leave an inheritance for the precise purpose of helping their children after their death (Masson and Pestieau 1991).
- 4.
Grandparent-grandchild transfers also exist, along with child-parent and grandchild-grandparent ascendant transfers. Here we focus exclusively on parent-child transfers.
- 5.
Institut national de la statistique et des études économiques (National Institute for Statistics and Economic Studies).
- 6.
Caisse nationale d’assurance vieillesse (National Old-Age Insurance Fund)
- 7.
Centre de recherche économique sur l’épargne (Centre for economic research on savings)
- 8.
“Conditions de vie des étudiants” survey by the “Observatoire nationale de la vie étudiante”.
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“Emploi du temps” survey.
- 10.
Frequency of transfers of time was available only for child-minding by persons from outside the household, but the database does not inform on hourly volume of transfers.
- 11.
For each transfer, respondents were asked to identify what type it was. They were free to determine whether a transfer was regular, occasional or exceptional; the meaning of those terms was not specified. That exceptional transfers during life are the equivalent of gifts is therefore an assumption on our part, but it is justified by the particularly high value of such transfers (€21,000 a year on average) compared to regular transfers (€3,600 a year) and occasional transfers (€2,600 a year).
- 12.
In 2005, some inheritances were received from parents not registered as deceased. This error is due to the survey questionnaire design: respondents were first asked whether they had received transfers, then from whom; only afterwards were they asked to specify transfer types. Respondents may very well have received an inheritance indirectly, the direct giver being the still living parent. We therefore counted “indirect” inheritances as gifts.
- 13.
It is likely that these inheritances included gifts, since an exceptional transfer was defined as an inheritance if the giver died either during the year of the survey or the preceding year. Givers may have made their gift immediately before they died. Cross-wave comparison of proportions of exceptional transfers represented by inheritances confirms our hypothesis: the respective figures for our sample are 29% in 2005, 26% in 2008 and 32% in 2011.
- 14.
The fall in number of transfers is due to panel attrition and ageing between waves (note that all second and third-wave respondents were also questioned in Wave 1). Financial transfers are received fairly early in the lifecycle (Fig. 10.2), which explains why their number fell sharply after 2005.
- 15.
The first question about received transfers was: “During the last 12 months, have you or your partner/spouse received for one time, occasionally, or regularly money, assets, or goods of substantive value from a person outside the household?”
- 16.
Though the grid is available only for the second and third survey waves, it is retrospective for Wave 2, making it possible to analyse the jobs the respondent occupied from age 16. The third-wave grid lists only jobs held since the last wave in which the respondent took part (2005 or 2008 depending on the respondent). To study work-related events, then, we had to eliminate households that did not participate in 2008 as we needed to know the respondent’s entire trajectory to have a value for the “first job” variable. Tables 10.2 and 10.3 and the Appendix table are based on this panel.
Table 10.2 Comparison of proportions of recipients and of average amounts received between persons who experienced life events and persons who did not Table 10.3 Effects of work-related and family events on probability of receiving a transfer: results of logit estimations (odds ratios) - 17.
All family and work-related events were constructed using this rule. Only “legal process of divorce” corresponded directly to respondent’s situation at the time of the survey.
- 18.
Applying the same indicator to the total value of financial transfers for the entire French population produces significantly different results. In 2005, the population aged 40 and under received only 50% of the aggregate value of financial transfers. This indicator reveals that asset transfers represent very large sums, especially inheritances, which, as explained, are received relatively late in the lifecycle.
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This indicator is equivalent to the “peak” for all transfers. The modal age, or the mode of the profiles of proportions of transfer recipients by age, corresponds to the highest value of the distribution.
- 20.
Mean age at inheritance corresponds to mean age at mother’s death, i.e. in most cases, the age at death of the last surviving parent.
- 21.
Attributing a value to the “recent first job” variable requires knowledge of the entire occupational trajectory as given on the occupation and education grid but, as explained, this information was only collected for the 2008 and 2011 waves. Moreover, only the 2008 wave provided respondent’s entire work history; the 2011 wave took account solely of jobs held since the preceding wave (see note 16). For 2005 and 2011, then, we included only respondents from 2008. For 2008, all respondents were included.
- 22.
This meant eliminating 3,885 observations, then 6,751 and finally 432 others. Respondents who had not answered all the questions used in the multivariate analysis were also excluded (1,168 observations).
- 23.
The “recent first job” variable is defined as having worked in one’s first job for at least 3 months of the survey year or the preceding year.
- 24.
These variables enable us to control for events that vary over time but not among individuals. For example, the effect on parent-child gifts of the Sarkozy government’s TEPA bill of 21 August 2007 that reduced taxes on such gifts is taken into account in the estimations via these temporal variables.
- 25.
A Hausman test confirmed the validity of using random effects.
- 26.
In our sample the proportion of financial support recipients is 3.4%; gift recipients 4.7% and recipients of time transfers 12.3% (see Appendix) – acceptable levels given the standard 10% threshold used in the literature (Kohlmann and Schmidt 2008).
- 27.
In France in 2005 the initial replacement rate – i.e., the ratio of the amount of last earned income to amount of first unemployment benefit – ranged from 57% to 75% (OECD Tax-Benefit Models).
- 28.
These studies focus on the causal effect of receiving an asset transfer on home acquisition. However, it is entirely possible that the significant impact of a home purchase actually corresponds to a reverse causality, i.e. the positive impact of receiving a transfer on the probability of purchasing a home.
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Appendix
Appendix
Descriptive statistics
Variable | Average | Standard deviation | Min. | Max. |
|---|---|---|---|---|
Financial support | 0.034 | 0.181 | 0 | 1 |
Gift | 0.047 | 0.211 | 0 | 1 |
Time transfer | 0.123 | 0.328 | 0 | 1 |
0 or 1 contact per year | 0.079 | 0.270 | 0 | 1 |
Primary school certificate | 0.280 | 0.449 | 0 | 1 |
Lower secondary | 0.238 | 0.426 | 0 | 1 |
Upper secondary | 0.071 | 0.257 | 0 | 1 |
Bachelor’s degree level | 0.137 | 0.343 | 0 | 1 |
Master’s degree level | 0.048 | 0.213 | 0 | 1 |
PhD level | 0.030 | 0.170 | 0 | 1 |
Age | 41.889 | 11.337 | 17 | 83 |
Age-squared | 1883.180 | 992.916 | 289 | 6.889 |
Male | 0.412 | 0.492 | 0 | 1 |
Number of siblings | 2.406 | 1.947 | 0 | 29 |
Household income (log) | 7.777 | 0.989 | 0 | 14.511 |
Monthly savings | 0.549 | 0.498 | 0 | 1 |
Financial support from parents, earlier survey waves | 0.033 | 0.178 | 0 | 1 |
Financial support from parents, earlier survey waves | 0.046 | 0.209 | 0 | 1 |
Other financial support from other people | 0.041 | 0.199 | 0 | 1 |
Other asset transfers from other people | 0.103 | 0.304 | 0 | 1 |
Other time transfers from family | 0.094 | 0.292 | 0 | 1 |
Paid help (time) | 0.254 | 0.435 | 0 | 1 |
Recent departure from parental home | 0.021 | 0.144 | 0 | 1 |
Recent home purchase | 0.072 | 0.259 | 0 | 1 |
Tenant – same home for a long time | 0.251 | 0.434 | 0 | 1 |
Tenant – moved recently | 0.128 | 0.334 | 0 | 1 |
Married recently | 0.028 | 0.166 | 0 | 1 |
In a long-standing union (consensual or civil union) | 0.213 | 0.410 | 0 | 1 |
In a recent union (consensual or civil union) | 0.073 | 0.260 | 0 | 1 |
Single, never in a union | 0.061 | 0.239 | 0 | 1 |
Single, no recent separation, widowhood, divorce or legal process of divorce | 0.100 | 0.301 | 0 | 1 |
Single, recent separation, widowhood, divorce or legal process of divorce | 0.031 | 0.173 | 0 | 1 |
Respondent or partner pregnant | 0.029 | 0.167 | 0 | 1 |
Birth of first child | 0.033 | 0.179 | 0 | 1 |
Birth of another child | 0.050 | 0.219 | 0 | 1 |
Number of co-resident children | 1.068 | 1.131 | 0 | 12 |
Student | 0.025 | 0.157 | 0 | 1 |
Recent first job | 0.014 | 0.119 | 0 | 1 |
Unemployed for a long time | 0.016 | 0.127 | 0 | 1 |
Recent job loss | 0.036 | 0.187 | 0 | 1 |
Inactive | 0.134 | 0.341 | 0 | 1 |
Partner is a homemaker | 0.037 | 0.188 | 0 | 1 |
Partner unemployed or retired | 0.102 | 0.303 | 0 | 1 |
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Le Goff, M., Navaux, J., Ragot, L. (2017). The Impact of Life Stages on Parent-Child Transfers. In: Régnier-Loilier, A. (eds) A Longitudinal Approach to Family Trajectories in France. INED Population Studies, vol 7. Springer, Cham. https://doi.org/10.1007/978-3-319-56001-4_10
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