Financial transfers from parents to adult children

Abstract

This paper uses 1996–2014 longitudinal HRS data to establish the relative importance of intervivos transfers, bequests and coresidency in the United States. We find that when computing the relative importance of intervivos transfers versus bequests, the aggregate perspective that pools all data into a single cross-section is very different than the parent-level longitudinal perspective, highlighting the special value of panel data. This difference reflects the fact that large bequests are highly concentrated and play an influential role at the aggregate level, while at the micro parent-level, intervivos transfers constitute the main form of financial support for most parents. Regarding coresidency, we find that although older children and parents tend to coreside when the child is helping the parent, coresidency tends to be more prevalent among poorer, younger parents and their children. Children who ever coreside with parents also receive larger total intervivos transfers.