This paper develops a conceptual framework for understanding the role of
intergenerational transfers in the intergenerational transmission of
poverty, provides empirical evidence on key aspects of intergenerational
transfers, and discusses the role of public policy in helping the poor
accumulate assets and transfer them to the next generation.
While different types of wealth can be transferred intergenerationally
by a multitude of actors, this paper is more narrowly focused on
transfers of human and physical capital (assets), forms of wealth for
which we have more empirical evidence. Section 2 consists of a
conceptual framework that examines how families transfer wealth to
children, and how the poor may face barriers to the transfer of such
wealth. Section 3 illustrates various aspects of the conceptual
framework using empirical evidence from developing countries, focusing
on three themes: (1) the role of credit constraints in preventing
optimal investments in human capital and asset transfers; (2) the role
of gender differences in schooling and assets in perpetuating unequal
lifetime incomes of men and women; and (3) the role of the marriage
market and assortative matching in perpetuating asset inequality across
families and intergenerationally. Section 4 examines the scope for
public policy to relieve constraints to the accumulation and transfer of
wealth to the next generation, bearing in mind the goals of reducing
both poverty and inequality in the long run.
Investments, bequests, and public policy: intergenerational transfers and the escape from poverty. Working Paper 98. Manchester: IDPM/Chronic Poverty Research Centre (CPRC), UK, ISBN Number: 1-904049-97-4, iii + 22 pp.