MPIDR Working Paper
Intergenerational transfers within the family and the role for old age survival
Kluge, F. A., Vogt, T. C.
MPIDR Working Paper WP-2020-021, 24 pages.
Rostock, Max Planck Institute for Demographic Research (May 2020)
In this paper, we study the relationship between income and old age survival via the indirect pathway of private transfers. Our analysis focuses on intergenerational transfers in the family as an important, but so far less investigated, link between income and improved old age survival. We use an agent based model to simulate an exchange relationship between two generations in a family and incorporate realistic demographic, economic and time use data for Germany. We ﬁnd that older parents transfer increasing shares of their pensions to their oﬀspring and receive informal care or emotional support in return. This exchange motive is mutually beneﬁcial as younger generations are in greater need for ﬁnancial subsidies and older ones for contact and care. Our inductive approach adds to our understanding how income is spread in the family and how older family members can beneﬁt from an exchange of money for care.