Parental Repayment Hypothesis in Intergenerational Financial Transfers from Adult Children to Elderly Parents: Evidence from Hong Kong

Abstract

This study examined financial transfers from adult children to non-co-resided elderly parents in Hong Kong, and it tested the parental repayment hypothesis regarding motives for transfers. Specifically, the research question is whether financial transfers are a function of the education or earning capacity of adult children. Based on data from a representative sample of adult children who provided financial support to their elderly parents aged 60 and above, we used multiple regression models to identify the correlates of the amount of transfers from children to their mother or father living apart. We found evidence supporting the parental repayment hypothesis, that providing security in old age is the children's repayment for parental investment in their education. There is only a weak relation between the number of children and the transfers. This calls into question common assumptions about the extent to which a decline in fertility poses a threat to the extent of familial support of older persons in the coming decades.