Abstract
A sample from the Wisconsin Longitudinal Study was used to examine the influence of parent-to-child financial transfers and economic resources on child-to-parent financial transfers, caregiving, time-help, and coresidence as multiple, interdependent transfers from middle-aged adult children to their elderly parents. There were strong positive effects of prior parent-to-child financial transfers in the models of caregiving, time help, and coresidence but no effect on child-to-parent financial transfers. Coresidence, caregiving, and time-help are complements but there was no interdependence between child-to-parent financial transfers and caregiving or time-help. The effects of parents’ incomes and net worth are interpreted as evidence about motives for transfers to them.
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Notes
A WLS mail survey obtained retrospective information from the adult child respondents about contact, closeness, and similarity in outlook with their parents, and we have used those measures to predict financial transfers from their parents. More frequent contact was associated with more financial transfers from parents, but including contact as a predictor did not affect the results for the effects of respondent’s or parent’s socioeconomic resources. Thus, our strategy here is simply to use prior financial transfers as an important predetermined variable, which permits direct comparisons to results from Henretta, Hill, Soldo, and Wolf (1997) and McGarry and Schoeni (1997).
A reviewer cautioned us that this test may not be valid as both altruism and exchange theories “yield the same prediction on the effects of parents’ resources and children’s resources on the occurrence of the transfer.” This observation is correct for the situation of a single altruist potential donor, but we base our hypothesis on two-sided altruism as in Laitner (1997) which considers whether a child’s income is high enough relative to the parents that the child transfers to the parent instead of the parent transferring to the children as well as no transfer occurring. In that context, parents with high income relative to the children would not receive transfers for altruistic reasons. We hypothesize that if such parents do receive transfers, it may be because exchange motivates the children.
Thirty-nine respondents reported both their mother and father were alive, but living separately. For those cases, we used the distance between the respondent’s and their mother’s home.
We are grateful that a referee corrected our mistaken belief that examining these correlations could be informative about whether the transfer types are complements or substitutes; detecting substitution requires quantitative measures of transfer amounts. In multivariate analysis a negative coefficient for the effect of whether a transfer was provided on whether another was also provided may indicate substitution, but we agree that measuring substitution requires amounts of transfers provided, which the WLS collected only for financial transfers.
Parent’s net worth is our strongest determinant of CTP financial transfers. Couch et al. (1999) reported that parents’ income level was a statistically significant determinant of CTP of $100 during the prior year among married children. Here, parent’s income level has a weaker association with CTP of $1,000 or more than net worth levels (Wald = 3.036, P = .081 for the highest income category and Wald = 19.988, P = .01 for the highest net worth category).
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This research uses data from the Wisconsin Longitudinal Study (WLS) of the University of Wisconsin-Madison (http://www.ssc.wisc.edu/∼wls/data/). Since 1991, the WLS has been supported principally by the National Institute on Aging (AG-9775 and AG-21079), with additional support from the Vilas Estate Trust, the National Science Foundation, the Spencer Foundation, and the Graduate School of the University of Wisconsin-Madison. The opinions expressed herein are those of the authors.
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Koh, SK., MacDonald, M. Financial Reciprocity and Elder Care: Interdependent Resource Transfers. J Fam Econ Iss 27, 420–436 (2006). https://doi.org/10.1007/s10834-006-9028-5
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DOI: https://doi.org/10.1007/s10834-006-9028-5