How do adverse life events impact intergenerational transfers?

Elder mother with adult son

When adverse life events, e.g., hospitalization, the onset of a disability, involuntary job loss, or a financial crisis, occur to retirement-aged parents it is likely that their adult children are also impacted. What these intergenerational impacts are is the subject of a new Upjohn Institute working paper titled “Adverse Life Events and Intergenerational Transfers” by Jessamyn Schaller (Claremont McKenna College) and Chase Eck (University of Arizona).

Schaller and Eck use panel data to examine events affecting parents’ households and the likelihood that parents bequeath assets to—or receive money or some other form of assistance from—their children. Besides offering standard descriptive statistics and results from regression analyses, the authors conduct an event study analysis by examining the changes in transfers following adverse events in parents’ households.

Their work shows that there are large decreases in the likelihood that children receive financial transfers following parents’ wealth loss or job displacement; parents increase transfers following spousal death and reduce them with the onset of disability and poor health; and that children, particularly those with low-wealth parents, increase financial transfers and in-kind assistance following adverse events in their parents’ households. 

Schaller and Eck’s work is partly supported by an Upjohn Institute Early Career Research Award.

Download the paper.

“Our analysis adds to the new literature on the dynamics of transfer behavior within households and also reveals potentially important intergenerational effects of adverse events.”
Schaller and Eck