Strategic Gift Giving in Europe: the relationship between intergenerational family ties and financial incentives

About this event

This seminar draws on research on the relationship between intergenerational family ties and financial incentives, specifically whether the adult children's intensity of upstream social contact responds to strategic gift motives, which refers to parents using gifts to incentivize their adult children to increase or maintain social contact. Using longitudinal data from the Survey of Health Aging and Retirement in Europe (2004 -2015) and other datasets such as the Household Finance and Consumption Survey, the study examines whether gift giving exerts an influence on child-parent social contacts. To ensure an exogenous source of variation in parents’ gift giving behavior, we exploit the exogenous variation produced by inheritance tax legislation reforms across European countries as an instrument for the decision to give gifts to offspring. We document evidence of heterogeneity of gifts and bequests in Europe and shows that while bequests are largely unevenly distributed within households, gifts are not. The findings suggest that a strategic gift motive exists, as parents use gifts instrumentally, and children, holding ‘caring for’ motives, respond by increasing or maintaining social contact. The study also reveals that legislation changes affect the trade-off between bequeathing and downstream gifting, independently of the specific relationship between the parents and the offspring. we investigate whether the effect is driven by the presence of grandchildren, or the fragile health status of the parents (which could imply strategic/altruism) motive and differences between step and biological children