Private and public transfers between generations: linking the family and the state

Abstract In the conventional story of modernization, the emergence of the nuclear family and of public old age security have been seen as parallel and mutually reinforcing processes. According to this view, the traditional intergenerational transfers in the family have been crowded out and replaced by those in the public sphere. In recent years, a growing body of research has demonstrated that substantial transfers between adult generations in the family beyond the nuclear households still exist. Their direction has been reversed, however. The new evidence shows that there is a net downward flow of private resources from the older generations to their adult offspring, i.e. counter to the public transfers. Two questions then arise: How are private and public transfers linked, i.e. to what extent do the private transfers from the older to the younger generations in the family depend on public transfers through old age pensions? And what are the effects of channelling public resources to younger family generations by way of older pension recipients? The paper addresses these questions by taking Germany as the model case.