Intergenerational Transfers of Time and Elderly Living Arrangements: A Bargaining Model of Family Resource Allocation Decisions

Posted: 14 Apr 1998

See all articles by Liliana Pezzin

Liliana Pezzin

AHCPR

Barbara Steinberg Schone

U.S. Department of Health and Human Services - Center for Cost and Financing Studies - Agency for Health Care Policy & Research (AHCPR); Georgetown Public Policy Institute

Date Written: September 1997

Abstract

In this paper, we examine resource allocation decisions of adult children and their frail elderly parents in a broader context of intergenerational residence choices. Based on a bargaining framework, we propose and estimate a model of intergenerational transfers of time, labor market participation and living arrangement decisions with the following key features: First, parent and child share a family-specific public good, the elderly parent's "well-being," irrespective of their living arrangement. Second, living arrangement and the shares of time apportioned by the adult child to labor, leisure and parental care are endogenous. Finally, the substitutes to the child's time transfers include the purchase of market-based (formal) care and the parent's outside option of institutionalization. Results based on the simultaneous, multi-equation, endogenous switching model applied to a sample of 477 parent-child pairs from the 1986 matched Hebrew Rehabilitation Center for the Aged (HRCA) Survey of the Elderly and HRCA-NBER Child Survey are generally consistent with expectations. In particular, our findings indicate that living and care arrangement choices are not invariant to the division of resources within the family. Simulations based on the estimated parameters are used to examine the effects of a public transfer program on intergenerational family exchanges.

JEL Classification: D10, H51, J14, H31

Suggested Citation

Pezzin, Liliana and Steinberg Schone, Barbara, Intergenerational Transfers of Time and Elderly Living Arrangements: A Bargaining Model of Family Resource Allocation Decisions (September 1997). Available at SSRN: https://ssrn.com/abstract=62773

Liliana Pezzin

AHCPR ( email )

2101 E. Jefferson St., Suite 500
Rockville, MD 20852
United States
301-594-1408 (Phone)

Barbara Steinberg Schone (Contact Author)

U.S. Department of Health and Human Services - Center for Cost and Financing Studies - Agency for Health Care Policy & Research (AHCPR) ( email )

2101 E. Jefferson St., Suite 500
Rockville, MD 20852
United States
301-594-1406, ext. 1470 (Phone)
301-594-2166 (Fax)

Georgetown Public Policy Institute ( email )

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Washington, DC 20007
United States
202 687 1147 (Phone)

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