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18.10.2023

A semiparametric alternative to the Heckman correction: application with left-censored data on parental transfers

verfasst von: Lu Wang, Yixiao Jiang, Zhaochen He

Erschienen in: Empirical Economics | Ausgabe 4/2024

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Abstract

Using a semiparametric estimator developed by Klein and Vella (J Appl Econom 24(5):735–762, 2009b), we study the motives for parental wealth transfers to living children using left-censored data from the Health and Retirement Study. We confirm the presence of heteroskedastic errors in our data and show that the inverse Mills ratio approach employed by the Heckman correction would be biased in such a setting. Using the more flexible semiparametic approach, we find evidence of a nonlinear relationship between amount of inter vivo transfers and recipient children’s household incomes, suggesting that parents’ motives for transferring wealth may vary depending on their child’s income level.

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Fußnoten
1
Source: US Census Bureau 2017 National Population Projections.
 
2
Cox et al. (2004), based on Philippine data, finds a large decrease in private transfer at low-income level and a small increase afterward. Cai et al. (2006) finds a similar pattern in transfer reaction when the recipient’s household income rises above the poverty line in China. Gibson et al. (2011) also finds the transfer motives reverse from altruism to exchange in Vietnam and Urban Papua New Guinea as the recipient’s household income increases.
 
3
The model is succinctly summarized in Appendix A, with a focus on its empirical implication. For its implication on public policies, see Way (2018) and Way et al. (2018).
 
4
To make estimation feasible in finite sample, we also assume the heteroskedasticity has an exponential form, where \(\pi _0\) captures each covariate’s contribution to the conditional variance. In Klein and Vella (2009b), the form of the conditional variance function S is left unspecified and is estimated under a semiparametric index assumption. Other empirical studies (Millimet and Roy 2016; Farré et al. 2013) also make this simplification.
 
5
A detailed description of the test procedure can be found in Section 15.5.3 in “Econometric Analysis of Cross Section and Panel Data,” MIT Press, 2010, 2e.
 
6
For binary explanatory variables (income group dummy, homeowner, poor health), we compute the probability difference before and after acquiring the characteristics. For continuous variables (income, wealth, age), we evaluate the impact of a one standard deviation change, while for number of kids we increase the variable by one.
 
7
This pattern holds for every explanatory variable that we include. For example, from Table 3, both approaches suggest children who are homeowners are less likely to receive a transfer. When it comes to the impact on the transfer amount, from Table 4 we find the Heckman approach estimates home-owner children receive 13.7% more transfer than non-home-owners, whereas the KV approach suggests they receive 26.2% more transfer than their non-home-owner counterpart.
 
8
Children must spend the time and energy which can be used otherwise to earn more income and/or care for his own home and children.
 
9
An increase in the child’s income causes his marginal utility at the endowment point to fall as well. With a higher income level, the child requires more consumption in order to be compensated for providing the first unit of services.
 
10
According to Ichimura and Lee (1991), identification of the index parameters in a multiple-index model requires each index to contain a variable that is excluded in other indices. Otherwise, neither index has independent variation when the other index is held fixed, making the index parameters unidentified.
 
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Metadaten
Titel
A semiparametric alternative to the Heckman correction: application with left-censored data on parental transfers
verfasst von
Lu Wang
Yixiao Jiang
Zhaochen He
Publikationsdatum
18.10.2023
Verlag
Springer Berlin Heidelberg
Erschienen in
Empirical Economics / Ausgabe 4/2024
Print ISSN: 0377-7332
Elektronische ISSN: 1435-8921
DOI
https://doi.org/10.1007/s00181-023-02507-6

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