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Financial Assistance Patterns from Midlife Parents to Adult Children: A Test of the Cumulative Advantage Hypothesis

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Abstract

Young adults may receive financial assistance from midlife parents as they experience life course transitions often associated with establishing independent status, such as schooling, marriage or gaining full-time work. We used longitudinal data from the Health and Retirement Study (1992–2002) and hypothesized that adult children in the United States who received repeated financial transfers from midlife parents experienced cumulative advantages across time. We also examined the data using parental household characteristics to reinforce the importance of previous transfer behaviors. We found that the receipt of prior transfers, family structure and parental household income were the strongest determinants of the odds that parents gave financial assistance to adult children as both generations aged. The findings also supported the cumulative advantage theory due to the larger likelihood of continued transfers.

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Notes

  1. For a review of inheritance and the effects of bequests on social policy, see Angel (2008).

  2. All transfers were recorded in US dollars.

  3. When respondents were asked if they had given a transfer, it was recorded as a yes or no. Unfortunately, the number of transfers within any given two year period was not recorded. However, the measure was able to illustrate the effect on continued giving.

  4. See Remle (2011) for a review of the economics and sociological literature about parents’ motives as altruistic or anticipated exchange.

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  1. Department of Economics, Francis Marion University, PO Box 100547, Florence, SC, 29501, USA

    Caroliniana S. Padgett

  2. Department of Sociology, Francis Marion University, PO Box 100547, Florence, SC, 29501, USA

    R. Corey Remle

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Padgett, C.S., Remle, R.C. Financial Assistance Patterns from Midlife Parents to Adult Children: A Test of the Cumulative Advantage Hypothesis. J Fam Econ Iss 37, 435–449 (2016). https://doi.org/10.1007/s10834-015-9461-4

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