Relocation, Intergenerational Transfers and Extended Family Insurance

31 Pages Posted: 3 Mar 2017

See all articles by Yipei Cao

Yipei Cao

University of Michigan at Ann Arbor

Frank P. Stafford

University of Michigan at Ann Arbor - Department of Economics

Date Written: March 2, 2017

Abstract

This paper studies how young adults make relocation decisions to take advantage of time transfers from parents as a form of insurance against adverse economic conditions. It first documents the fact that adult children who received negative income shocks during the Great Recession were more likely to move to live closer to parents. Only one tenth of these movers chose to reside within their parents' home. The paper sets up a stylized model to illustrate how the possibility of time transfers affects the labor supply and welfare of adult children, and compares its impact with other forms of intergenerational transfers. We utilize the model to explore whether parental time assistance to the child, aided by proximity, becomes a more common phenomenon when the labor market deteriorates.

Keywords: relocation, time use and financial transfers, extended family insurance.

JEL Classification: J6, E2, I3.

Suggested Citation

Cao, Yipei and Stafford, Frank P., Relocation, Intergenerational Transfers and Extended Family Insurance (March 2, 2017). Available at SSRN: https://ssrn.com/abstract=2926781 or http://dx.doi.org/10.2139/ssrn.2926781

Yipei Cao (Contact Author)

University of Michigan at Ann Arbor ( email )

238 Lorch Hall
611 Tappan Ave.
Ann Arbor, MI 48109
United States

Frank P. Stafford

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

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