How Strong Are Bequest Motives?
55 Pages Posted: 14 Jun 2017 Last revised: 9 May 2019
Date Written: May 5, 2019
This paper analyzes consumption and saving decisions of two-generations households over a period with unanticipated changes in health status and life expectancy for the oldest generation. The dataset is obtained from merging administrative data on individual cancer diagnoses with income, wealth, and family linkages. Estimates show that widowed individuals respond to increases in mortality and changing health conditions by transferring wealth to their children. The size of the inter vivos transfers is positively related to the wealth of the parent, the severity of the diagnosis, and are somewhat larger for women than for men. Taken together, the results provide novel empirical support for dynastic models of overlapping generations.
JEL Classification: D1, D14, D31, E21, I12
Suggested Citation: Suggested Citation