41 Pages Posted: 13 Feb 2010
Date Written: February 11, 2010
Intergenerational cohabitation is becoming less common in modern societies. The opportunity costs of caring for parents are increasing, and the notion of filial piety is weakening. Meanwhile, in most developing Asian countries, a public old-age support system has yet to be developed. This paper delineates the positions of parents and children in the family decision of living arrangements, which have important policy implications on the reliability of filial support as a form of old-age security. We use panel data from Indonesia to study factors that initiate cohabitation by elderly parents and their adult children. Transition analysis provides a clearer interpretation of causality than cross-sectional analysis. We find that while cohabitation is motivated by parental needs, especially those of mothers, the family decision is influenced to a larger extent by the private gains and costs of the children. Cohabitation tends to occur when the child is unmarried or has a low level of education. However, parents who cohabitate tend to be healthy and wealthy, and they also generally live with a spouse. We also find that elderly parents who are poor and recent migrants are most at risk of not receiving filial support. The development of public support programs would result in potential welfare gains, particularly for those vulnerable to not receiving filial support.
Keywords: informal care, living arrangements, intergenerational transfer, cohabitation, Indonesia, finite mixture logit
JEL Classification: C25, D1
Suggested Citation: Suggested Citation
Johar, Meliyanni and Maruyama, Shiko, Intergenerational Cohabitation in Modern Indonesia: Filial Support and Dependence (February 11, 2010). UNSW Australian School of Business Research Paper No. 2010 ECON 07. Available at SSRN: https://ssrn.com/abstract=1551862