A Longitudinal Perspective on Inter Vivos Transfers Between Children and Their Parents in Need of Long-Term Care

Once a parent needs long-term care, intergenerational transfers from children to parents are considered as economically important. However, less is known on how child-to-parent transfers evolve, as these kinds of transfers are typically analyzed in the cross section. In the light of aging populations, this study examines how inter vivos transfers from adult children to elderly parents change once a parent needs LTC using longitudinal data from the German Family Panel. Transfers in form of emotional support, financial support, household help, and personal care are distinguished. The results show that children respond to a parent’s need for long-term care by increasing inter vivos transfers. However, the results also reveal that children’s behavior varies by the type of transfer considered. It is concluded that key policy issues, which address the growing need for long-term care in aging societies, should not be discussed without considering the transmission mechanism within the family. This study shows that children react to a parent’s need for long-term care. Likewise, children are also expected to react to changes in the availability of publicly paid long-term care services.