Resource Transfers to the Elderly: Do Adult Children Substitute Financial Transfers for Time Transfers

Using the Health and Retirement Study, this research investigates whether an adult child substitutes financial transfers to an elderly parent for time transfers as the cost of his or her time increases. I develop and estimate a model of the effect of a child's wage rate on time and money transferred to an elderly parent. I calculate a wage elasticity and study how this varies with the existence of substitutes such as siblings and a spouse, and how this varies by sex of the child. The results show that an adult child will substitute money for time. Furthermore, I find that for a male child, a spouse is a substitute helper for elderly parents and that for a female child a spouse is a complementary helper while siblings serve as substitutes.