Intergenerational Altruism and Transfers of Time and Money: A Life-Cycle Perspective

47 Pages Posted: 18 Jul 2018

See all articles by Uta Bolt

Uta Bolt

Institute for Fiscal Studies (IFS)

Eric French

Department of Economics; Institute for Fiscal Studies (IFS)

Jamie Hentall Maccuish

University College London - Department of Economics

Cormac O’Dea

Institute for Fiscal Studies (IFS)

Date Written: April 1, 2018

Abstract

Parental investments in children can take one of three broad forms: (1) Time investments during child-hood and adolescence that aid child development, and in particular cognitive ability (2) Educational investments that improve school quality and hence educational outcomes (3) Cash investments in the form of inter-vivos transfers and bequests. We develop a dynastic model of household decision making with intergenerational altruism that nests a child production function, incorporates all three of these types of investments, and allows us to quantify their relative importance and estimate the strength of intergenerational altruism. Using British cohort data that follows individuals from birth to retirement, we fnd that around 40% of differences in average lifetime income by paternal education are explained by ability at age 7, around 40% by subsequent divergence in ability and different educational outcomes, and around 20% by inter-vivos transfers and bequests received so far.

Keywords: Intergenerational transfers, wealth accumulation and inequality

Suggested Citation

Bolt, Uta and French, Eric and Maccuish, Jamie Hentall and O’Dea, Cormac, Intergenerational Altruism and Transfers of Time and Money: A Life-Cycle Perspective (April 1, 2018). Michigan Retirement Research Center Research Paper No. 2018-379, Available at SSRN: https://ssrn.com/abstract=3216029 or http://dx.doi.org/10.2139/ssrn.3216029

Uta Bolt

Institute for Fiscal Studies (IFS)

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Eric French (Contact Author)

Department of Economics ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Jamie Hentall Maccuish

University College London - Department of Economics ( email )

Drayton House, 30 Gordon Street
30 Gordon Street
London, WC1H 0AX
United Kingdom

Cormac O’Dea

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
102
Abstract Views
518
rank
284,841
PlumX Metrics