Abstract: Scarce evidence of a bequest motivation underpinning family social contact masks the presence of other alternative types of financial incentives such as gifts. We study whether the intensity of parent-child social contact is influenced by financial incentives, and more specifically the presence of a strategic gift motive, amidst a decline in bequests taxation. We examine this question using a sample of adult children and their older parents from a large longitudinal data from the Survey of Health, Aging and Retirement in Europe (SHARE) between 2004 and 2015. We draw upon an instrumental variable strategy where we exploit evidence of changes in inheritance tax legislation across Europe as a source of an exogenous variation in gift giving. We find that changes in gift giving resulting from several inheritance tax reforms modify the intensity of family social contact with parents. We estimate that a gift (exceeding an annual value of 250€) to a child increases the frequency of social contact in 0.73 units out of an average of 5.7 units (ranging from 1 no contact to 7 daily contact). These findings are robust and consistent with the presence of a ‘strategic gift-giving’ hypothesis as explaining family social contact.
The presentation is a part of the CPop/DaWS Interdisciplinary Lecture Series on Care and Intergenerational Justice.