Transfer Behavior Within the Family: Results From the Asset and Health Dynamics Study

Abstract

When individuals fall on hard times, can they rely on their family for financial support? In view of proposed reductions in public assistance programs, it is important to understand the mechanisms through which families provide support for their members. In this article we provide evidence that intrafamily transfers are compensatory, directed disproportionately to less well-off members. In a given year, adult children in the lowest income category are 50 percent more likely to receive a financial transfer from their parents, and on average they receive over $300 more than their siblings who are in the highest income category. The dataset used in the new Asset and Health Dynamics (AHEAD) study contains information on all children in the family; therefore, we are able to estimate models that control for unobserved differences across families. Our results are robust to these specifications. In addition, we do not find evidence that parents provide financial assistance to their children in exchange for caregiving.