The
Effects of Income and Wealth on Time
and Money Transfers Between Parents and Children
Joseph G. Altonji, Fumio
Hayashi, and Laurence Kotlikoff
Abstract
We use the 1988 (Panel Study of Income Dynamics (PSID) to study
the effects of income and wealth on transfers of money and time
between individuals and their parents as well as the effects of
incomes of other relatives on these flows. We relate the relative
incomes of parents and parents in-law to transfer amounts given
andreceived by married couples. We also study how the relative incomes
of divorced parents influence transfers. We find that money transfers
tend to reduce inequality in household incomes and that time transfers
are only weakly related to income differences. Richer siblings give
more to parents and receive less. Among parents and parents in-law
the richer set of parents is more likely to give money and less
likely to receive money. The same is true of divorced parents. In
contrast to the implications of simple exchange models of transfers,
there is little evidence in the cross section or in the analysis
using siblings that parental income or wealth raises time transfers
from children or that time transfers are exchanged for money transfers.
In the cross section and among siblings, the strong negative relationship
between time transfers and distance from parents is not associated
with a strong negative relationship between distance and money transfers.
We discuss the implications of our results for alternative models
of transfers.
Joseph G. Altonji, Department of Economics,
Northwestern University Fumio Hayashi, Department of Economics, Columbia University Laurence Kotlikoff, Department of Economics, Boston University
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