INTERGENERATIONAL FINANCIAL ASSISTANCE IN FAMILIES

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The principal objective of the project is to assess how changes in the life course of both parents and children influence the incidence, direction and magnitudes of financial assistance from parents to their adult children, and the siblings of these children, and from adult children to their parents. Data from all five cohorts of the National Longitudinal Surveys of Labor Market Experience--the Young and Mature Men and Women and the Youth cohorts--will be combined and linked to form pairs of siblings and/or parent/child matches stratified by sex and race. Longitudinal information on these matched pairs will be used to obtain estimates, by race and sex, of the importance of intergenerational financial transfers (i) relative to the incomes of both recipients and of donors and (ii) relative to the amount of public assistance income, by program type, received over a substantial fraction of the joint life cycles of parents and their adult children (up to 17 years). Estimates will also be obtained of (a) how changes in family structure (fertility, divorce, death), in wage rates, in unemployment spells, in the incidence of illness and other life-cycle events in both the "child" and "parental" generations jointly influence the flows of finance assistance between them and (b) the effects of public transfer income on intergenerational family transfers. The analyses will employ estimation procedures and specifications that allow for the existence of time persistent unobservables correlated across generations, for endogenous labor supply and savings behavior and for strategic behavior. Behavioral models of intergenerational transfers incorporating uncertainty and dynamic behavior will be developed and estimated with the objective of achieving a better understanding of the motivations for intergenerational transfers and for evaluating the robustness of prior findings on exchange versus altruistic motives to the introduction of more realistic assumptions about the heterogeneity of populations and life cycle behavior. The merged panels of cohort data will thus be used to ascertain how the consequences of differing but contemporaneous life-cycle events experienced by parents and their adult children are shared between and across generations and how public programs affect these intergenerational financial link-ages.