Bequest Behavior and the Effect of Heirs’ Earnings: Testing the Altruistic

That parents transfer resources to children because of altruistic concern is a reasonable a priori assumption. However, economic theories of altruistic trans-fers have produced many counterintuitive conclusions, and, consequently, much debate. When applied to bequests, these theories predict that inheritances will compensate for eamings differences between siblings as well as between parents and children. This paper tests these implications. Using a new data set centered on federal estate tax retums, little support can be found for an altruistic theory of bequests. This finding has implications for macroeconomic policy, govemment transfer programs, and inequality. {JEL D19) Hundreds of billions of dollars per year are bequeathed by people in the United States,' and about two thirds of this passes from par-ents to children. ^ Among several economi