Living arrangement and caregiving expectation: the effect of residential proximity on inter vivos transfer
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Informal care by adult children provides important support for frail seniors, yet it is unclear whether this costly service is balanced by parents’ financial transfers. This paper examines how family living arrangements affect parents’ relationship with their children. Specifically, it investigates whether a child’s residence affect parents’ decision in making financial gifts, and whether this relationship is based on their expectation to receive care in the future. Results show that children in closer proximity are more likely to receive transfers from their parents on both the intensive and extensive margins. A closer examination of the effects reveals that the difference can be at least partially explained by the increased likelihood of care provision when a child is living in closer proximity. The findings suggest that today’s residential location could be a signal in indicating a child’s prospect of providing care and thus affects parents’ decision in making financial gifts. It also reaffirms the interdependency between caregiving and residential decisions and calls attention to its roles in shaping intergenerational relationship.
KeywordsInformal care Long-term care Inter vivos transfer Intergenerational transfer Family exchange
JEL ClassificationI13 I38 J14
I would like to express my immense gratitude to Professor Emeritus Neil Bruce, Professor Emeritus Robert D. Plotnick, Professor Jennifer Romich, and Professor Rachel Heath for their guidance during the course of the research. I would also like to thank the anonymous reviewers for sharing their insights on the manuscript and the audiences at several conferences for their comments on an earlier version of the manuscript.
Compliance with Ethical Standards
Conflict of interest
The author declares that he has no conflict of interest.
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