The division of inter-vivos parental transfers in Europe

This paper explores the patterns of the division of inter-vivos financial transfers from old parents to adult children in a sample of 14 European countries drawn from two waves of the Survey of Health, Aging, and Retirement in Europe. Contrary to previous research, mostly focused on the US, this study finds a higher number of parents who divide their financial transfers among their adult children equally. On average, 36% of European parents divide equally. These results contrast sharply with the approximately 6.4%-9.2% of American parents giving equal transfers. It is possible that altruistic parents are also concerned with a norm of equal division, and therefore they do not fully offset the differences of income among their children as predicted by the standard model of altruism. The econometric results show that parents are more likely to give equal transfers if, in their view, income inequality among their children is not too high. Furthermore, the analysis is extended by adding variables at the country level. In this regard, income inequality, pension expenditures, the societal level of altruism and inheritance taxes are key to explaining country differences.