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The relationship between upstream intergenerational transfers and wealth of older adults: evidence from Thailand

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Abstract

This paper examines the relationship between the wealth of older parents and the receipt of in-kind and monetary transfers from non-resident adult children. Based on a nationally representative sample from the 2007 and 2011 Surveys of Older Persons in Thailand (N = 46,216), a sample-selected bivariate ordered probit model is employed. Different measures of wealth are explored, including home ownership, income and savings. The results show that the relationships between each measure of wealth and the receipt of in-kind as well as monetary transfers are positive and statistically significant. Nonlinearities are observed with regard to income but not home ownership and savings. The fact that wealthier parents receive larger transfers implies that, to promote old-age financial security, the government should not only devise a strategy to incentivise adult children to make larger upstream transfers, but also target and provide additional support for financially vulnerable older adults.

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Notes

  1. The exchange rate is the weighted average interbank rate as of July 17, 2015 (Bank of Thailand 2015).

  2. Omitted variable bias can also be explained more technically. Suppose that \(Z\) represents wealth of adult children and \(X\) represents wealth of older parents. If we assume momentarity that the regression model of interest is linear, then estimating the model where only \(X\) is available potentially yeilds biased coefficient estimates. That is, \(E\left( {\hat{\beta }|X} \right) = \beta + \left( {X^{{\prime }} X} \right)^{ - 1} X^{{\prime }} Z\pi\), where \(\hat{\beta }\) is the estimated impact of \(X\), \(\beta\) is the true impact of \(X\) and \(\pi\) is the true impact of \(Z\) on the outcome of interest. The second term of the right hand side of the equation is the magnitude of omitted variable bias. Since the covariance \(X^{{\prime }} Z\) is positive (because wealth of adult children and older parents are positively correlated) and \(\pi\) is postive (Boonsang 2007; McGarry 1999; Norton and van Houtven 2006), then the bias is positive too. This implies that \(\hat{\beta } > \beta\) or that the coefficients are overestimated.

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Authors and Affiliations

  1. Center for Health Economics, Faculty of Economics, Chulalongkorn University, Pathumwan, Bangkok, 10330, Thailand

    Nopphol Witvorapong

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Witvorapong, N. The relationship between upstream intergenerational transfers and wealth of older adults: evidence from Thailand. J Pop Research 32, 215–242 (2015). https://doi.org/10.1007/s12546-015-9151-y

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