Intergenerational inter vivos transfers: What is the pattern and level of financial support parents provide their adult children?

Why do parents give their adult children money? What child and parental characteristics influence monetary transfers? Does the effect of these characteristics differ across low, medium, and high transfer dollar amounts? What is the parent\u27s motive behind providing their adult child with a financial transfer? Is it based on the child\u27s income or a life event experienced by the child (i.e., altruism or contingent exchange)? This research examines the relationship between financial transfers and characteristics of the adult child. The data used are the 1992–1994 Health and Retirement Study (HRS), which contains a nationally representative sample of adults born between 1931 and 1941. At baseline, financial transfers to 18,463 adult children living independently from their parent\u27s household (N = 6,001) are examined. Cross-sectional and longitudinal models are specified to determine the relationship between the financial transfer and characteristics of the adult child, controlling characteristics of the parental household across transfer levels. The motive behind the financial transfer behavior is tested using two competing theories, altruism and contingent exchange. Lastly, the relationship between race and the financial transfer as a percent of total household income is examined. Two variables consistently have the greatest effect on the amount of the financial transfer the adult child receives: whether or not the child is currently in school and the total number of children from the parental household. These variables consistently have the greatest effects across: (1) all adult children and sub-samples based on financial transfer amounts, and (2) cross-sectional models specified by either logistic or tobit regression and the longitudinal change models. The motivation behind the financial transfer behavior is clearly identified by the contingent exchange perspective within the longitudinal models. Support for this perspective differed according to the level of the financial transfer given and the critical life event. There were instances in which neither altruism nor contingent exchange explained the transfer behavior. No support was observed for altruism. Finally, race was observed to have a negative effect on the financial transfer as a percent of household income: black households provided a financial transfer of a lower percent of household income compared to white households