Upstream Intergenerational Transfers

This study analyzes upstream intergenerational transfers from middle-ages children to their elderly parents. We formulate a model in which the middle-aged child transfers both money and time to an elderly parent, based on an altruistic motive. We test the altruistic assumption empirically and examine substitution between financial transfers and time transfers using data from the Health and Retirement Survey (HRS). Empirical results support the assumption that upstream transfers are motivated by altruism, particularly financial transfers. Poor parents receive more money. Overall, the results of time transfers provide less strong support for our model. A child with a high way tends to transfer money rather than time. Our findings on time transfers differ from predictions of models based on exchange motives. Public subsidies of nursing home care crowd out both private financial and time transfers.