Three Essays on Intergenerational Transfers

Intergenerational transfers of money, time, and other resources are major drivers of wealth inequality in the United States (U.S.). Wealth confers a wide array of advantages, from financial security to social prestige, power, and health. Wealth also can be used to accumulate more wealth. Given that intergenerational transfers generate economic inequality, this three-essay dissertation will seek to examine the causes and consequences of intergenerational transfers in the U.S. The first two essays are devoted to the understanding of the precedents of intergenerational transfers, while the last essay assess the consequence of intergenerational transfers on mental health.Essay 1: Cumulative inequality theory (CIT) posits that disadvantage experienced in early life may not only adversely affect one’s life course, it may also shape one’s ability to provide assistance to the next generation. Since intergenerational exchanges can either promote or set back the next generation’s success, this study therefore aims to determine how childhood disadvantages of parents are associated with the inter vivos downward transfers. Data from the Panel Study of Income Dynamics Childhood Retrospective Circumstances Survey and Rosters and Transfers Module were used to estimate linear regression models. Childhood experiences were measured in the following ways: an aggregate index, categorical variables, or as separate domains. Following CIT, domains included were economic, psychosocial (family, peer), environmental, and health. Downward transfers considered in this study were measured in terms of time transfers and money transfers in the past year, for aid in schooling, for home purchase, and for other purposes. Controlling for adult children’s characteristics that reflect needs for parental assistance, and upward time and money transfers to account for reciprocity, the results indicate that parent’s assistance to their adult children vary by their early-life experiences, and some childhood domains matter more (i.e., economic, family, environmental) than others (i.e., peer, health). Those with less affluent upbringing gave significantly more time transfers but less money to their adult children. Money earmarked for schooling purposes were at most $9,000 less for those with the worst level of childhood misfortunes. The forces that shape parental assistance to adult children, therefore, date as far back as the grandparent generation.Essay 2: Whether private intergenerational transfers crowd out or crowd in public welfare, have been subject to debate for almost half a century. Crowding out considers public and private transfers as substitutes, whereas when crowding in occurs the public sector frees up family’s resources via social welfare provisions, allowing families to transfer resources amongst their members. Often, studies on this topic either use cross-country variation from different welfare regimes or average social welfare expenditure per capita, without consideration of the varied social welfare experiences among givers and receivers. This is the first study to document how parental financial transfers and time transfers in the form of grandchild care are associated with the relative welfare experiences of the parent (giver) and the adult child (beneficiary) by exploiting the heterogeneity of public welfare across U.S. states. Parent-child dyadic data come from the Health and Retirement Study (HRS), a longitudinal and nationally representative study of older adults in the U.S. I linked data from the HRS respondent file and the child-level file constructed by the RAND Corporation with state-specific public welfare expenditures per capita from the Government Finance Database. Controlling for parent, adult child, and reciprocity related determinants of downward transfers, mixed effects logistic regressions clustered by households showed that compared to dyads who both live in a state with low levels of welfare generosity: (1) dyads whose parents live in a less generous state compared to their children have lower odds of downward money and time transfers and (2) dyads whose parents live in a more generous state while the child lives in a relatively less generous states have lower odds of providing both money and time transfers. The results from this study provide partial support for both crowding out and crowding in while implying support for both altruistic and selfish transfer motives. These mixed results call for scholars to reevaluate the consensus of the crowding in hypothesis as the main explanation of downward transfers of money and time from aging parents to adult children, and suggest that better data on both givers’ and receivers’ public welfare experiences are needed to fully contextualize family transfers.Essay 3: Intergenerational transfers are potential social determinants of health, as multiple generations coexisting has become a commonplace in aging societies and austere social protections push families to support their members. This study therefore aims to assess the association between intergenerational transfers between parents, adult children, and other kin, and depressive symptoms among U.S. older adults aged 51+ using data from the Health and Retirement Study waves 2010-2018. Two subsamples were constructed to account for the effect of kin: (1) respondents with at least one adult child and deceased parents/ parents-in-law, and (2) respondents with at least one adult child and one living parent/ parent-in-law throughout the study period. Transfers were categorized as either giving or receiving money and time. Net of relevant sociodemographic factors, random effects logistic regression models revealed that for both subsamples, the odds of having high depressive symptoms were greater for those who have given money transfers. Receiving money transfers and time transfers were also found to be detrimental for mental health. The findings are consistent with the stress process model and also provide partial support for economic exchange theory and contingency exchange. Understanding the factors that are related to older adult well-being is vital as this age group is at risk of mental health decline due to the life course challenges that typically occur in advanced ages like social isolation, bereavement, as well as illnesses and functional limitations.