The Effects of Income and Wealth on Time and Money Transfers between Parents and Children
62 Pages Posted: 19 May 1998 Last revised: 5 Aug 2022
Date Written: April 1996
Abstract
We use the 1988 PSID to study the effects of income and wealth on transfers of money and time between individuals and their parents as well as the effects of incomes of other relatives on these flows. We relate the relative incomes of parents and parents in-law to transfer amounts given and received by married couples. We also study how the relative incomes of divorced parents influence transfers. We find that money transfers tend to reduce inequality in household incomes and that time transfers are only weakly related to income differences. Richer siblings give more to parents and receive less. Among parents and parents in-law the richer set of parents is more likely to give money and less likely to receive money. The same is true of divorced parents. In contrast to the implications of simple exchange models of transfers, there is little evidence in the cross section or in the analysis using siblings that parental income or wealth raises time transfers from children or that time transfers are exchanged for money transfers. In the cross section and among siblings, the strong negative relationship between time transfers and distance from parents is not associated with a strong negative relationship between distance and money transfers. We discuss the implications of our results for alternative models of transfers.
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Paper statistics
Recommended Papers
-
Saving and Liquidity Constraints
By Angus Deaton
-
Risk Sharing Networks in Rural Philippines
By Marcel Fafchamps and Susan Lund
-
Drought and Saving in West Africa: Are Livestock a Buffer Stock?
By Marcel Fafchamps, Christopher Udry, ...
-
Insuring Consumption Against Illness
By Paul J. Gertler and Jonathan Gruber
-
Are the Poor Less Well-Insured? Evidence on Vulnerability to Income Risk in Rural China
By Martin Ravallion and Jyotsna Jalan
-
In Sickness and in Health: Risk Sharing within Households in Rural Ethiopia
By Stefan Dercon and Pramila Krishnan
-
The Method of Endogenous Gridpoints for Solving Dynamic Stochastic Optimization Problems
-
Endogenous Group Formation in Risk-Sharing Arrangements
By Garance Genicot and Debraj Ray