Family Support in Hard Times: Dynamics of Intergenerational Exchange after Adverse Events
We use an event-study approach to examine changes in intergenerational financial transfers and informal care within families following wealth loss, job exit, widowhood, and health shocks. We find sharp reductions in parental giving to adult children following negative shocks to parents' wealth and earned income, particularly in low-wealth households. Parental giving also decreases with some health shocks and increases following spousal death. Meanwhile, children of low-wealth households increase financial transfers to their parents following adverse shocks and children in both high- and low-wealth households increase their provision of informal care to parents following a wide range of adverse shocks.
Funding for this project was provided by the W.E. Upjohn Institute for Employment Research and by the Eller College of Management at the University of Arizona. An earlier version of the paper is posted as Upjohn Institute working paper 19-313, with the title "Adverse Life Events and Intergenerational Transfers." We are grateful to Gary Solon, Steven Haider, Hilary Hoynes, Heather Antecol, Itzik Fadlon, Mariana Zerpa, and participants of UC Santa Barbara's 2019 conference on "Health and Labor Market Effects of Public Policy" for helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.