Intergenerational Financial Transfers Research Articles

OLG Model Analysis of Delayed Retirement and Social Pension Effects on Family-Based Elderly Care in China

Driven by the traditional concept of “Raising Children to Ensure Old-age Security”, China’s elderly care system has long relied on a family-centered approach, with intergenerational financial transfers (IFTs) serving as a major source of income for the elderly. However, as China’s population ages, the government’s plan to implement delayed retirement from 2025, along with pension reforms, is expected to reshape family-based eldercare and intergenerational financial dynamics. This paper employs an Overlapping Generation (OLG) model, grounded in unified growth theory, which incorporates a delayed retirement policy under the constraint of pension fund balance to examine the impact of adjusting the pension contribution rates (PCRs) and raising retirement age (RA) on IFT rates. The research findings indicate a negative correlation between RA, PCR, and IFT. Both policies have the potential to alleviate the burden on family-based eldercare. The integrated implementation of these two policies not only creates room for a phased reduction in pension contribution rates but also enables the effective utilization of senior workers’ expertise and experience.

Adult Children’s Marital Timing and Upward Intergenerational Financial Transfers: Variation across Gender, Race, and Ethnicity

Marriage is a key adult milestone yet is also considered a greedy institution that monopolizes resources, jeopardizing adult children’s financial transfers to aging parents. As the age at which marriage shifts later into adulthood, this study examines whether marriage still operates as a greedy institution, considering the role of marital timing on upward financial transfers to aging parents. Using data from Waves I–V of Add Health and Wave I of the Add Health Parent Questionnaire from 1994 to 2018, we examined whether timing of marriage (never, early, on time, and late) was associated with adult children’s upward financial transfers to their parents, accounting for variation across gender, race, and ethnicity. Adult children who never married were the largest group who gave upward financial transfers to their aging parents (33%). Results suggested that marriage or timing of marriage was a greedy institution among men, women, white, Hispanic, and Asian adults, but not Black adults, suggesting heterogeneity in the role of marriage on family support.

Money and mental health: The impact of intergenerational transfers on elderly people in China.

Using three waves of the China Health and Retirement Longitudinal Study, this paper examines whether financial transfers from adult children to elderly parents affect the latter's mental health. Both OLS and instrumental variable (IV) estimates show that financial transfers significantly attenuate depressive symptoms of elderly individuals, with a much larger size of the IV estimates. We also examine the income and cultural channels through which intergenerational transfers work and further discuss the explanatory powers of these two channels through a decomposition analysis. The results suggest the cultural channel accounts for a larger proportion of the financial transfer effect. This means that the unique beneficial impact of intergenerational financial transfers on the mental health of older adults cannot be fully substituted in the foreseeable future.

Family Support during Hard Times: Dynamics of Intergenerational Exchange after Adverse Events

Abstract We use event studies to examine changes in intergenerational financial transfers and informal care within families following wealth loss, job exit, widowhood, and health shocks. We find sharp reductions in giving to adult children following negative shocks to parents' wealth and earned income, particularly in low-wealth households. Giving also decreases with some health shocks and increases following spousal death. Meanwhile, children of low-wealth households increase financial transfers to parents following adverse shocks in parental households and children of both high- and low-wealth households sharply increase their provision of informal care to parents following a wide range of adverse shocks.

PASSING ON THE SILVER SPOON: THE ROLE OF EARLY LIFE CIRCUMSTANCES ON DOWNWARD INTERGENERATIONAL FINANCIAL TRANSFERS

Abstract Childhood circumstances are known to etch an indelible influence on individual outcomes across the life course such as education, income, and health. Yet relatively little is known about how early life exposures influence family outcomes. This study aims to determine how childhood exposures are associated with inter vivos downward intergenerational financial transfers among older adults aged 51-85 with at least one surviving adult child. Using cumulative (dis)advantage theory, I hypothesized that experiences in childhood shape intergenerational transfers patterns – with early-life advantage being able to provide more transfers than their disadvantaged counterparts. I used data from the US Health and Retirement Study waves 1998 to 2018 (n=32,095 individuals, 169,316 person-years) and estimated random effects models. The index of childhood socioeconomic status was constructed by adding the following dichotomized indicators: poor to fair family socioeconomic status, mother / father having less than HS education, father working for service sector, and moved due to financial difficulty. Downward transfers were defined as whether the respondent gave money, helped pay bills, or covered certain costs to children or grandchildren worth ≥US$ 500. The unadjusted model revealed that the probability of providing downward transfers among those with 1 and 2+ childhood socioeconomic status disadvantage was 5.4% and 3.8% less than those without disadvantage. The inverse association of early life disadvantage and downward transfers were preserved when basic demographic controls and household income and wealth were controlled for, although the magnitude slightly declined (4.0% and 3.1% lower probability for those with 1 and 2+ misfortunes, respectively).

Cognitive function and cognitive decline among older rural Chinese adults: the roles of social support, pension benefits, and medical insurance

Objectives This study investigated whether social support, pension benefits, and medical insurance coverage are related to cognitive function and decline among older rural Chinese adults and whether depressive symptoms represented a pathway linking these factors with cognitive function. Methods Data are taken from three waves of the China Health and Retirement Longitudinal Study (N = 5,135). Cognitive function is assessed with episodic memory and depressive symptoms are assessed with the 10-item CESD Scale. Social support (intergenerational financial transfers, weekly contact with children, perceived availability of future support, and living arrangements), pension benefits, and medical insurance coverage are self-reported measures. Multilevel linear regression models are employed. Results Intergenerational financial transfers, perceived availability of future support, and pension income are associated with higher levels of cognitive function. Living with others, perceived availability of future support, medical insurance coverage, and pension income are associated with a slower risk of cognitive decline. Depressive symptoms mediated the association between perceived availability of future support, living with others, pension income and level of cognitive function and the link between perceived availability of future support, pension income, and cognitive decline. Conclusion The findings suggested these modifiable factors should be taken into account when screening older adults for possible cognitive impairment and decline. Early interventions may also be helpful by expanding social resources and reducing psychological distress.

The effects of an old-age allowance programme on intergenerational interactions in Taiwan: Heterogeneous effects by adult children’s motives for giving

AbstractThis study examines the effects of an old-age allowance programme in Taiwan, the Senior Citizens Welfare Living Allowance (SCWLA), on intergenerational financial transfers, living arrangements and contact, as well as the heterogeneity of its effects by adult children’s five types of motives for giving: altruism, exchange, reciprocity, affection, and sense of responsibility. Using 2002, 2004, 2005 and 2006 data from the Panel Study of Family Dynamics, we employed a difference-in-difference individual fixed effect model to compare the outcomes across the treatment (aged 65 and older) and comparison groups (aged 55 to 64) before and after the introduction of SCWLA. Our results indicate that SCWLA crowds in intergenerational contact but does not significantly change financial transfers and co-residence patterns. The increase in intergenerational contact is primarily driven by adult children having lower motives for giving. This suggests that old-age allowances may reduce financial entanglement between adult children and older parents and change the social norm by raising “low motivators’” awareness, respect and concern for elderly. Providing public transfer to the elderly should not be hampered by the fear of distorting family support functions.

Intergenerational financial transfers and physical health of old people in rural China: evidence from CHARLS data

ABSTRACT: With the reduction of intergenerational temporal transfers, financial transfers from adult offspring to their elderly parents are prevailing in rural China. Although much has been done, little is known about the association between the expansion of intergenerational transfers and rural old people’s physical health in China. The purpose of this paper was to examine the effect of intergenerational financial transfers on the elders’ physical health in rural China. Using data collected from China Health and Retirement Longitudinal Study (CHARLS), panel data fixed effect model and threshold model are employed to estimate the impact of intergenerational financial transfers on the old people’s physical health in rural areas. Results showed that; although, the intergenerational financial transfers have a positive effect on the old people’s physical health, no linear relationship exists between them. Intergenerational financial transfers are clearly less effective for low-income old people’s physical health than those of middle-income, while the effect on high-income old people’s health is the most insignificant. Studies concerning the effect of intergenerational financial transfers on the elders’ health in developing countries remain limited. Findings of this paper provided great insights into how intergenerational transfers, such as intergenerational financial transfers, may affect the well-beings of old residents in rural areas. Additionally, this study can offer inspiration to policy makers regarding what measures they should take to enhance rural old residents’ well-beings.

Family Support in Hard Times: Dynamics of Intergenerational Exchange after Adverse Events

We use an event-study approach to examine changes in intergenerational financial transfers and informal care within families following wealth loss, job exit, widowhood, and health shocks. We find sharp reductions in parental giving to adult children following negative shocks to parents' wealth and earned income, particularly in low-wealth households. Parental giving also decreases with some health shocks and increases following spousal death. Meanwhile, children of low-wealth households increase financial transfers to their parents following adverse shocks and children in both high- and low-wealth households increase their provision of informal care to parents following a wide range of adverse shocks.

OLDER PARENTS’ PERCEIVED SOCIAL SUPPORT AND STRAIN FROM ADULT CHILDREN AND INTERGENERATIONAL FINANCIAL TRANSFER

The gerontological literature indicates that both positive and negative relationships are dimensions of intergenerational relationships. Moreover, depending on intergenerational financial support, the association between older parents’ perceived social support and strain from adult children can vary. The purpose of the current study is to investigate the association between intergenerational social support and strain. We also examined the impact of intergenerational financial transfers on intergenerational social support and strain. We analyzed data of 1,329 older adults aged 65 to 84 from the Health and Retirement Study collected at 2006(t1), 2010(t2), and 2014(t3). Cross-lagged panel models were performed to examine the reciprocal association between intergenerational social support and strain over time. Multiple group comparisons were conducted to estimate the impact of financial support exchange on social support and strain from adult children. The results demonstrated that social support and strain from adult children were stable over time. Furthermore, social strain had negative effects on the changes in social support from adult children. Multiple group comparisons suggested that in the parents’ groups (financial support provision vs. no provision to adult children, and financial support receipt vs. no receipt groups from adult children) intergenerational social support and strain were stable over time. Additionally, the impact of social strain on subsequent social support from adult children differed depending on intergenerational financial support. These findings highlight the reciprocal association between intergenerational positive and negative relationships. Further, this research suggests the importance of intergenerational support in older parents’ and adult children’s positive and negative relationship quality.

Intergenerational financial transfers and indirect reciprocity: determinants of the reproduction of homeownership in the post-socialist Czech Republic

Using a representative survey of the Czech population, we demonstrate that intergenerational within-family financial (wealth) transfers represent the main mechanism in the reproduction of homeownership in Czech post-socialist society. The provision of a transfer or the lack of one largely determines the housing tenure of Czech young adults. Without transfers, the children of homeowners are significantly less likely to also become homeowners. We also show that the probability of an adult child receiving a transfer and the size of the transfer are closely linked (a) to the adult child’s within-family socialisation and (b) to the fact of whether the parents had also received a transfer from their parents in the past and how large that transfer was. These findings have important implications for how housing markets operate and for social inequalities. For example, if an established history of within-family transfers is a predictor of homeownership in future cohorts, this may mean that an important part of society will be systemically and predictably excluded from access to homeownership and a fixed axis of reproduced housing wealth inequality may form.

The impact of intergenerational financial transfers on health and wellbeing outcomes: A longitudinal study

This paper estimates the impacts of intergenerational financial transfers on the physical health, mental health and perceived financial security of Australian males and females. We distinguish between two key sources of intergenerational financial transfers – inheritances and inter vivos parental cash transfers. Taking nationally representative data from the 2001–2015 Household, Income and Labour Dynamics in Australia Survey, we develop a two-stage modelling strategy that controls for potential bias in reported health and wellbeing responses that arise due to unobserved heterogeneity. In the first stage, propensity score matching is applied to achieve matched treatment and control groups, where the former is comprised of intergenerational financial transfer beneficiaries while the latter is made up of non-beneficiaries with a matched set of characteristics to the beneficiaries. This is followed by the application of regression models that further control for unobservable heterogeneity, so that the coefficients on the intergenerational financial transfer predictors can be attributed to the effect of the transfers on health and wellbeing. We do not find systematic evidence of a causal link between receipt of intergenerational financial transfers and health and wellbeing outcomes. This applies to both inheritances and inter vivos parental cash transfers, and for both males and females.

Performing housing debt attachments: forming semi-financialised subjects

ABSTRACTThis article contributes to the understanding of how first-time buyers and their parents form attachments to housing debt. Interviews, carried out in the Czech Republic, with 40 first-time homebuyers and 10 with their parents were used to identify multiple layers of debt performativity. These layers consist of statements expressing moral evaluations and emotions; calculative and cognitive devices; and references to practices. Two arguments are advanced through a framework of layered performativity. The first argument concerns the subjectivities of debtors. Debtors adopt investment concepts in their statements and use calculative devices. However, by relying on familial moral orders of security and familial financial transfers, these debtors must be regarded rather as semi-financialised subjects. The second argument relates to the re-configuration of social and economic relations in families. Debt attachment endorses the use of intergenerational financial transfers, which in turn may enforce continued intra-familial reciprocity, both in terms of the recipients’ obligation to the providers of a gift or loan as well as concerning an obligation to help their children attain homeownership in the future. Finally, intergenerational transfers also transform the character of the mortgage market and mortgage debt, making informal debts an important part of formal debt circuits.

Financial transfers from adult children and depressive symptoms among mid-aged and elderly residents in China - evidence from the China health and retirement longitudinal study

BackgroundAlthough the awareness of mental health problems in late life is rising, the association between financial transfers to the older generations from children and mental health at older ages in China has received little attention. This study examines the association between financial transfers from children and depressive symptoms among the mid-aged and elderly residents (from 45 years of age and older) in China.MethodsWe used the data from the China Health and Retirement Longitudinal Study (CHARLS, 2013) (n = 10,935) This included data on financial transfers from all non-co-resident children to their parents, and the individual scores on depressive symptoms as measured by the 10-item Center for Epidemiologic Studies–Depression Scale (CESD-10). A two-level - individual and community levels - mixed linear model was deployed to explore their association.ResultsFinancial transfers from children to parents was the major component of inter-generational financial transfers in Chinese families. A higher financial support from non-co-resident children was signivicantly and positively related to fewer depressive symptoms (coef. = − 0.195,P-value< 0.001) among both the mid-aged and elderly parents.ConclusionsFinancial transfers from non-co-resident children are associated with depressive symptoms among mid-aged and elderly residents in the China situation. Taxation and other policy measures should encourage and facilitate these type of financial transfers and prevent a decrease of support from children to parents.

Characteristics and Determinants of Intergenerational Financial Transfers Within Families Using Mixed Care for Elderly People

Starting from Bengtson's solidarity paradigm, we will investigate the role of internalized family norms in intergenerational support as well as experienced ambivalence from the adult child perspective. We assume that internalized family norms are an important determinant of relationship regulation as they have an impact both on the selection of specific behavior as well as on its evaluation. As a consequence, own and others' behavior should be most positively evaluated if it is in line with internalized norms and values. In contrast, if intergenerational solidarity and support exchange do not converge with internalized norms and expectations, ambivalence might be experienced. These assumptions are examined in a sample of N = 131 middle-aged adults living in Luxembourg and Germany. Findings showed that normative aspects of intergenerational solidarity were less important compared to affective aspects when predicting support exchange between adult children and their parents; however, family values had a moderating role in the relation between support exchange and ambivalence. Results are discussed with respect to the centrality of values in implicitly and explicitly guiding support behavior within families.

Characteristics and Determinants of Intergenerational Financial Transfers Within Families Using Mixed Care for Elderly People

The provision of care to dependent elderly parents or parents-in- -law is an important part of intergenerational exchange within families, especially in countries where the long-term care system is based predominantly on family care. However, in mixed-care networks, care tasks are shared between family members and formal carers. Additionally, adult children may need to financially help their parents, especially due to the financial burden that formal care places on the elderly. We used the Slovenian national survey of social home care users and their family members, collected in 2013, to observe the characteristics and determinants of intergenerational financial transfers in families that use mixed care, within dyads comprising a care recipient and a family caregiver. The findings show that there is a considerable proportion of financial exchange among the observed dyads. Furthermore, among the determinants, the income of the elderly person and amount of care received are important for financial flows upward (to the elderly parent) and downward (from the elderly parent). The concurrent flows differ; their main determinants are the carer's age, household size and education.

Intergenerational Financial Transfers Across Seven Cities in Latin America and the Caribbean: The Intersection of Gender and Proximity

This study extends recent research on the relationship between residential proximity and the support older adults receive from their children, by providing a comparative assessment of the association between the location of the nearest child and older adults’ receipt of financial transfers in seven different cities across Latin America and the Caribbean. The paper further examines the extent to which financial transfers are contingent on the gender of the parent and their economic needs. Data (N=9,063) are drawn from the 2000 Survey of Health, Well-Being and Ageing in Latin America and the Caribbean (SABE) collected in seven major cities. The results highlight the importance of co-residence for parents’ receipt of financial transfers. Although increasing distance was negatively associated with receiving support, the city of residence moderated the association between further distance and the receipt of financial support. Older adults in contexts with weak social welfare systems, Mexico City and Havana, were more likely to receive financial support from children far away relative to those residing in stronger welfare contexts such as Montevideo, Buenos Aires, São Paulo, and Bridgetown. Children do respond positively to their parents’ economic vulnerability but this relationship is also contingent on parents’ proximity to their children, city of residence, and gender. Overall, geographic distance appears to be more, or less, important to financial support depending on the strength of social welfare systems that characterize parents’ city of residence.

Intergenerational Financial Transfers and Young Adults’ Transitions In and Out of the Parental Home

Over the last few decades, youth have been delaying leaving the parental home and increasingly returning to it, often making these transitions for reasons other than marrying, such as to pursue edu...

Is giving or receiving psychologically beneficial to older mothers in South Korea? Importance of marital status

ABSTRACT In order to understand intergenerational financial transfers and subjective well-being for older mothers, this study argues that marital status is an important factor to be considered. Using the first wave of the Korean Longitudinal Study of Aging (KLoSA), this study finds that married older mothers report higher levels of life satisfaction when they provide economic support but widowed older mothers feel higher levels of life satisfaction when they receive economic support. Also, regular or irregular financial support appears to also matter in the associations between financial support and life satisfaction. These findings suggest that married and widowed older mothers have different viewpoints about the parent-children relationship.

Adult children’s characteristics and intergenerational financial transfers in urban China

Financial transfers between adult children and their elderly parents should be viewed as part of larger family dynamics that can also involve siblings. This is particularly likely to be the case in China, where there has been a traditional emphasis on financial support within the extended family. Using data from the 1999 ‘Study of Family Life in Urban China’ and fixed effects models, this study examines how the characteristics of adult children and their adult siblings are associated with financial transfers between them and their elderly parents. Particular attention is given to sibling differences with regard to factors such as gender, birth order, education and financial situation. The findings revealed that in urban China the traditional gender pattern is changing, in that daughters, rather than sons, now provide more financial support to their parents. However, parents still tend to give more financial assistance to sons. Children with more education (i.e., those who received more parental investment) provided greater financial support to their parents, to repay this earlier investment. Furthermore, elderly parents redistributed resources within the extended family by receiving more financial transfers from financially better-off children and giving more financial transfers to financially worse-off children. These findings suggest that the Chinese family serves as a financial buffer, with intergenerational transfers operating as a micro-level welfare system.