Informal care is the largest source of long-term care for elderly, surpassing home health care and nursing home care. By definition, informal care is unpaid. It remains a puzzle why so many adult children give freely of their time. Transfers of time to the older generation may be balanced by financial transfers going to the younger generation. This leads to the question of whether informal care and inter-vivos transfers are causally related. We analyze data from the 1999 and 2003 waves of National Longitudinal Survey of Mature Women. We examine whether the elderly parents give more inter-vivos monetary transfers to adult children who provide informal care, by examining both the extensive and intensive margins of financial transfers and of informal care. We find statistically significant results that a child who provides informal care is more likely to receive inter-vivos transfers than a sibling who does not. If a child does provide care, there is no statistically significant effect on the amount of the transfer.
The authors thank Daifeng He, and participants at the American Society of Health Economists biennial conference and the CESifo Venice Summer Institute who provided comments on an earlier draft. Patricia Rhoton, at the Center for Human Resource Research at Ohio State University, provided tremendous assistance in constructing the panel-level child–parent transfer data. We are grateful for funding from the National Institute on Aging through grants K01AG041763 (Nicholas). The authors gratefully acknowledge use of the services, facilities, and support of the Population Studies Center at the University of Michigan, funded by NICHD Center Grant R24 HD041028.
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