Risk-sharing within families: Evidence from the Health and Retirement Study

Abstract

We report strong empirical support for the presence of a risk-sharing motive of withinfamily monetary ‡ows. A standard model of risk-sharing predicts that the share of current family income consumed by a child positively depends on that child's lifetime contribution to the present value of the total family income. Therefore, sensitivity of transfer receipts to ‡uctuations in recipient's current income is smaller for children who contribute more. We test this distinguishing prediction of the risk-sharing model by exploiting the observed variation of parental transfers to siblings over 17 years in a longitudinal dataset derived from the Health and Retirement Study.

The costs of consumption smoothing: less schooling and less nutrition

“…Other studies have focused on the transfers from parents to children and on risk-sharing among family members, seeHayashi et al (1996) andAkin and Leukhina (2015).…”

The Costs of Consumption Smoothing: Less Schooling and Less Nutrition

“…show survey evidence that the elderly 'perceive' their children as helping them in old age, but the precise mechanism is not identified. Our results show that cohabitation and the associated self-farming labor supply of children are key in the context of Malawi.11 Other studies have focused on the transfers from parents to children and on risk-sharing among family members, seeHayashi et al (1996) andAkin and Leukhina (2015).12 A large part of the ISA improvements draw onGrosh and Glewwe (2000) that include specific issues on consumption measurement(Grosh and Deaton, 2000).…”