Altruistic Bequests with Inherited Tastes

Abstract

This paper examines the altruistic model of bequest when a child inherits life standard aspirations from his parents. We prove that the impact of the aspiration effect on transfers can be positive or negative, depending on both the strength of inherited tastes and the coefficients\nof risk aversion for the parent and the child. However, numerical illustrations indicate that the case for a negative effect is rather weak. Using a French data set on transfers within the family,we investigate how transmission habits affect the level of private assistance. We show that\nparents are more likely to help their children when they have themselves received money from their own parents. Hence, any public program that affects current transfers also influences family transfers in the future

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