Do First Time House Buyers Receive Financial Transfers from Their Parents?

Previous papers have suggested that financial transfers from parents to children are significant around the time that children buy their first home. Using a Danish data set with longitudinal information about wealth for a sample of first-time homeowners and their parents, we test whether there are direct financial transfers from parents to children in connection with the purchase of the house or in connection with unemployment spells occurring just after the purchase when children typically hold few liquid assets. We first document that child and parent financial resources are correlated. We then introduce conditioning variables and show that these weaken the intergenerational correlation. In the most ambitious specification we exploit the panel aspect of the data to also condition on fixed unobserved factors that arguably govern preference parameters and/or productivity, and we find no evidence of intergenerational correlations, suggesting that, in the Danish context, direct transfers from parents to children are not important around the time of the purchase of the first home. JEL code: D91, E21, R29