Why do children transfer to their parents? Evidence from South Korea

Abstract

I examine motives behind interhousehold upstream transfers using a sample of child-parent pairs in South Korea. The estimation results indicate that upstream transfers in Korea cannot be explained by just one motive. I find evidence that altruism is the dominant motive at the margin if parental income is low, but not so if parental income is high. I also find that upstream transfers are given, at least in part, in exchange for child care service and in lieu of personal visits. There is little evidence that upstream transfers are used by children to win parental favor for future gains such as an inheritance or to repay implicit parental loans used for education. Additional evidence is provided from the analysis of the frequency of personal visits and semiparametric regressions. Determinants of downstream transfer amounts are also examined.