Motives for private transfers over the life cycle: An analytical framework and evidence for Peru

This paper tests for the motives for private income transfers. We consider two motives: altruism and exchange, The question of private-transfer motives is important because such motivation can influence the effects of public income transfers on the distribution of income. Using a household survey for Peru, we find that transfer amounts received increase with recipient pre-transfer income, which contradicts a key prediction of the strong form of the altruism hypothesis but is consistent with exchange. We also find that capital market imperfections are likely to be an important cause of private transfers and that social security benefits 'crowd out' the incidence of private transfers. (C) 1998 Elsevier Science B.V.