The Motives of Intergenerational Transfer to the Elderly Parents in China: Consequences of High Medical Expenditure

Abstract

The support for the elderly is facing big challenges with the problem of population aging. Transfers from adult children could partly insure elderly parents against low income and high medical expenditure. There are two main motives for transfers in the literature, namely altruism and exchange. Using data from a new household survey of people aged 45 and above in China, we estimate the transfer derivatives with the adjustment of medical expenditure in elderly parents’ income. We find a large negative impact of adjusted income on transfers at the lower end of income distribution, which is consistent with the altruistic motive. Evidence on the exchange motive is found only for sons, but not for daughters. In addition, there is evidence on the “exchange-for-service” motive, which interprets transfer as a payment to parents’ family services, such as taking care of grandchildren.

Financial transfers from adult children and depressive symptoms among mid-aged and elderly residents in China - evidence from the China health and retirement longitudinal study

“…In China, children hold obligations to support their parents [ 30 ], and the adult children should support their elderly parents financially and ensure their basic living needs [ 31 ]. The accelerated emigration as well as inadequate pension and health insurances for the elderly, especially in China’s rural areas, made it particularly urgent to oblige non-co-resident children to support their parents financially [ 32 ]. Additionally, Chinese traditional culture of “filial piety is the foundation of all virtues” may play an important role in cross-generational transfer between children and parents [ 33 ].…”

“…Thus, for adult children, financial transfers may be a kind way to compensate the effects of living apart from their parents [ 11 ]. Additionally, where there is a lack of inadequate pension and health insurance for the elders, especially in rural areas and less developed regions (such as western China), more elderly parents have to depend on financial supports from their adult children [ 32 ]. However, financial transfers from adult children is not just about the money aspect, it is part of the overall connection between generations.…”

Children's education and their financial transfers to ageing parents in rural China: mothers and fathers’ strategic advantages in enforcing reciprocity

“…Altruism as a motivation for children's financial transfers to parents has found wide support in the previous literature on Chinese families (Zimmer et al, 2008;Cong and Silverstein, 2011). Low-income parents, especially, benefit from the altruism of their children (Cai et al, 2006;Wu and Li, 2014).…”

“…Importance of children's financial support for rural elders Chinese rural older adults are financially vulnerable because of the lack of availability of social security programmes and pensions, lifelong poverty, and asset transfers in the forms of educational and marriage investments in children (Yan, 2003;Zheng, 2013). Financial transfers from adult children to rural older adults provides some insurance function against older adults' disadvantaged economic status and high medical expenses (Wu and Li, 2014). Given their circumstances, rural older adults are dependent on their children for financial support (China Research Center on Aging, 2003;Zimmer and Kwong, 2003;Giles et al, 2010).…”

<p>Association Between Supplemental Private Health Insurance and Burden of Out-of-Pocket Healthcare Expenditure in China: A Novel Approach to Estimate Two-Part Model with Random Effects Using Panel Data</p>

“…CHARLS is an aging survey of 45 years and older people and their spouses in China that used a multistage probability sampling to allow nationally representative estimates. 3,10,11 The longitudinal surveys collected healthcare expenditure and total household consumption data from the respondents, 12 which allowed us to exploit the panel structure of the data. However, at least two challenges can arise in the analysis of healthcare expenditure using panel data.…”