The Division of Parental Transfers in Europe

Abstract

In the extensively studied equal division puzzle, one finds very large shares of equal bequests and unequal inter-vivos transfers given to adult children. However, such puzzle is less evident in Europe as we find a higher prevalence of parents giving equal inter-vivos transfers. We argue that altruistic parents are also concerned with norms of equal division. Thus, parents do not fully offset child income inequality. The parents start to give larger transfers to poorer children if the child income inequality becomes unbearable from the parent’s view. We find econometric evidence for this behavior using microeconomic data of 12 European countries from the two waves of the Survey of Health, Aging, and Retirement in Europe (SHARE).

Keywords: inter-vivos transfers, altruism, equal division

JEL Classification: D19, D64, J18