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Old-Age Support in Developing Countries: Labor Supply, Ingenerational Transfers and Living Arrangements

  • Cameron, L.
  • Cobb-Clark, D.

Without broad-based public pension schemes, the majority of the elderly in developing countries are left to rely on their own current and accumulated earnings and support from children as means of old-age support. We develop a cooperative bargaining model that allows us to jointly estimate the determinants of coresidency, financial transfers from non-coresiding children, and the labor-supply of elderly Indonesians. We find that many Indonesians, especially men, continue to work well into old age even if they are living with their adult children. There is little evidence that transfers are a substitute for the income support provided by the elderly parent's own labor supply. Transfers are associated with a decline in hours of work only for non-coresiding mothers. Furthermore, transfers are not strongly related to parental need or the ability of the child to give.

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Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 773.

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Length: 37 pages
Date of creation: 2001
Date of revision:
Handle: RePEc:mlb:wpaper:773
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  1. Hiedemann, Bridget & Stern, Steven, 1999. "Strategic play among family members when making long-term care decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 40(1), pages 29-57, September.
  2. Pezzin, Liliana E & Schone, Barbara Steinberg, 1997. "The Allocation of Resources in Intergenerational Households: Adult Children and Their Elderly Parents," American Economic Review, American Economic Association, vol. 87(2), pages 460-64, May.
  3. Steven Stern & Maxim Engers, . "Long-Term Care and Family Bargaining," Virginia Economics Online Papers 320, University of Virginia, Department of Economics.
  4. Ravallion, Martin & Dearden, Lorraine, 1988. "Social Security in a "Moral Economy": An Empirical Analysis for Java," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 36-44, February.
  5. Joseph G. Altonji & Fumio Hayashi & Laurence Kotlikoff, . "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," IPR working papers 95-22, Institute for Policy Resarch at Northwestern University.
  6. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
  7. Shleifer, Andrei & Summers, Lawrence H. & Bernheim, B. Douglas, 1986. "The Strategic Bequest Motive," Scholarly Articles 3721794, Harvard University Department of Economics.
  8. Lisa Cameron, 2000. "The residency decision of elderly indonesians: A nested logit analysis," Demography, Springer, vol. 37(1), pages 17-27, February.
  9. Hoerger, Thomas J & Picone, Gabriel A & Sloan, Frank A, 1996. "Public Subsidies, Private Provision of Care and Living Arrangements of the Elderly," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 428-40, August.
  10. Angus S. Deaton & Christina Paxson, 1998. "Measuring Poverty among the Elderly," NBER Chapters, in: Inquiries in the Economics of Aging, pages 169-204 National Bureau of Economic Research, Inc.
  11. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-93, Nov.-Dec..
  12. McGarry, K & Schoeni, R-F, 1996. "Measurement and the Redistribution of Resources Within the Family," Papers 96-11, RAND - Reprint Series.
  13. Lee Lillard & Robert Willis, 1997. "Motives for interqenerational transfers: Evidence from Malaysia," Demography, Springer, vol. 34(1), pages 115-134, February.
  14. Cox, Donald C & Jimenez, Emmanuel, 1992. "Social Security and Private Transfers in Developing Countries: The Case of Peru," World Bank Economic Review, World Bank Group, vol. 6(1), pages 155-69, January.
  15. Hoddinott, John, 1992. "Rotten Kids or Manipulative Parents: Are Children Old Age Security in Western Kenya?," Economic Development and Cultural Change, University of Chicago Press, vol. 40(3), pages 545-65, April.
  16. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119, March.
  17. Giorgio Secondi, 1997. "Private monetary transfers in rural china: Are families altruistic?," Journal of Development Studies, Taylor & Francis Journals, vol. 33(4), pages 487-511.
  18. Hanoch, Giora & Honig, Marjorie, 1983. "Retirement, Wages, and Labor Supply of the Elderly," Journal of Labor Economics, University of Chicago Press, vol. 1(2), pages 131-51, April.
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