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Financial Transfers from Living Parents to Adult Children: Who Is Helped and Why?

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  • Brent Berry

Abstract

. To what extent can young adult children rely on their parents for financial support? This question will take on added importance if the commitments of the Social Security system put greater strain on the children of retirees. Despite the critical role that parents have in supporting their children, why they help some and not others remains unclear. Findings using two waves of data from the Health and Retirement Study that control for the needs of children and the resources of parents suggest that parents give more inter vivos financial assistance to their disadvantaged children rather than focusing on children most able to give financial help in return. Other measures of child well‐being besides income, including home ownership, education, parental status, and marital status, also suggest that parents help needier children more. Children who live nearby also receive more, a finding consistent with exchange motives or simply the ability of these children to more stridently demand support. Neither altruism nor exchange theories explain why stepchildren receive substantially less support than naturally born or adopted children. The diversity of effects suggests that giving is based on heterogeneous motives—parents may temper their altruism for children by the degree to which they feel responsible and by the stridency of some children in seeking support. Findings are robust upon allowing for unobserved differences across families by estimating fixed effect models.

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  • Brent Berry, 2008. "Financial Transfers from Living Parents to Adult Children: Who Is Helped and Why?," American Journal of Economics and Sociology, Wiley Blackwell, vol. 67(2), pages 207-239, April.
  • Handle: RePEc:bla:ajecsc:v:67:y:2008:i:2:p:207-239
    DOI: 10.1111/j.1536-7150.2008.00568.x
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    Cited by:

    1. Zanin, Luca, 2018. "Private monetary transfers between households: Who is helped and by whom?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 17(C), pages 76-82.
    2. John C. Henretta & Matthew F. Voorhis & Beth J. Soldo, 2018. "Cohort Differences in Parental Financial Help to Adult Children," Demography, Springer;Population Association of America (PAA), vol. 55(4), pages 1567-1582, August.
    3. Daniel Barczyk & Matthias Kredler, 2014. "A Dynamic Model of Altruistically-Motivated Transfers," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(2), pages 303-328, April.
    4. Yoko Mimura, 2021. "Associations Between Financial Transfer from Grandparents and Family Expenditures for Children’s Precollege Education in Japan," Journal of Family and Economic Issues, Springer, vol. 42(4), pages 715-728, December.
    5. Daniel Barczyk, 2013. "Deficits, Gifts, and Bequests," 2013 Meeting Papers 25, Society for Economic Dynamics.
    6. Aviad Tur-Sinai & Noah Lewin-Epstein, 2020. "Transitions in Giving and Receiving Intergenerational Financial Support in Middle and Old Age," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 150(3), pages 765-791, August.
    7. Aldieri, Luigi & Fiorillo, Damiano, 2015. "Private monetary transfers and altruism: An empirical investigation on Italian families," Economic Analysis and Policy, Elsevier, vol. 46(C), pages 1-15.
    8. Tim Krieger & Jens Ruhose, 2013. "Honey, I shrunk the kids’ benefits—revisiting intergenerational conflict in OECD countries," Public Choice, Springer, vol. 157(1), pages 115-143, October.
    9. Tom Emery, 2013. "Intergenerational transfers and European families: Does the number of siblings matter?," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 29(10), pages 247-274.
    10. Alfano, Vincenzo & Capasso, Salvatore, 2021. "Playing dead pool against the contributions system," The Journal of the Economics of Ageing, Elsevier, vol. 20(C).

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