The Effects of Income and Wealth on Time and Money Transfers between Parents and Children

Abstract

Abstract In this chapter we examine the effects of income and wealth on transfers of money and time between individuals and their parents and in-laws, using US data. Our purpose is to contribute to a growing body of evidence on the effects of differences in income, assets, and current income relative to permanent income on the direction and quantity of transfers. (See Hill and Soldo (1993) and Shoeni (1993c) for recent surveys of the literature on transfers and Hill, Morgan, and Heroz (1993) for a descriptive analysis of transfer data from the Panel Study of Income Dynamics.) We estimate the effects of siblings’ incomes on the amounts received from and given to parents. We provide the first estimates of the effects of a married person’s parents’ income, relative to the income of the person’s parents in-law, on the amounts given to and received from the two sets of parents. Also considered is how the relative incomes of divorced parents influence transfers to and from adult children. Finally, we examine the interrelationship between time transfers and money transfers and also the effects of distance on the two types of transfers. Our results have a number of implications for alternative theories of transfers.