Effects of Intergenerational Transfers on Elderly Coresidence with Adult Children: Evidence from Rural India

The present paper argues that intergenerational transfers between elderly parents and adult children are important determinants of any coresidency arrangement though generally overlooked in the existing literature. In this respect the paper distinguishes between exchange of both financial and other kinds of transfers between elderly parents and adult children and then examines the effects of these transfers on coresidency taking account of the inherent endogeneity of these transfers to coresidency decision. There is evidence that the effects of transfers on coresidency arrangements could be biased if one does not correct for the endogeneity bias. The corrected estimates derived from a system of correlated and recursive system of transfers and coresidency equations suggest that the probability of coresidence is generally lower among the better off elderly; the likelihood is also lower for the older and female elderly without a spouse and also those with poor health, thus necessitating social protection for these disadvantaged elderly.