Intergenerational transfers over the adult life cycle in three European welfare state regimes




Mudrazija, Stipica

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Rapid population aging driven by increasing life expectancy and falling birthrates has resulted in substantial increases in the old-age dependency ratio and decreases in the ratio of workers to retirees in all developed nations. In this context, some policymakers look to the support role of the family to moderate the effects of potentially shrinking public support. Yet, relatively little is known about the flow of transfers between family generations across the life cycle or the influence of public policy on the size and timing of those transfers. A core objective of this dissertation is to study the nature and net value of family transfers, defined in terms of the financial value of various types of transfers parents give to children (e.g., money, care and help, grandchild care, and co-residence) net of the value of the same types transfers they receive from children. Data for this study come primarily from the Survey of Health, Ageing, and Retirement in Europe, and the sample includes 36,095 parent-child dyads from 11 European countries representing social democratic, conservative, and traditional welfare-state regimes. Time transfers are monetized using information on minimum and average hourly wages. The net value of intergenerational family transfers over the adult life cycle is estimated using piecewise linear spline regression. The findings reveal that intergenerational family transfers are nontrivial across mature European welfare states. Their net value follows a nonlinear pattern of positive transfers from parents to grown children until advanced old age when the net value declines sharply and ultimately becomes negative--the point at which the generational exchange starts mostly to benefit parents. The transition starts later and is less pronounced across more generous welfare states in Northern Europe, while the opposite is true of less generous welfare states in Southern Europe. Transfer behavior of parents and grown children across Europe is most consistent with the need for help and ability to give. The results demonstrate that assessments of the effects of public policies affecting intergenerational redistribution of resources would benefit from taking into account how family members of different generations redistribute resources due to changes in those policies.




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