The empirical inflation of intergenerational financial transfers: is the bank of mum and dad too big to fail?

Tom Emery, Netherlands Interdisciplinary Demographic Institute (NIDI)

Intergenerational Financial Transfer research has developed considerably over the past decade and now forms a mature literature examining the extent to which financial assistance is given by parents to their adult children over the life course. Yet this paper argues that this literature has evolved on the back of a one-sided understanding of intergenerational transfers. One of the challenges of intergenerational studies in an ageing society is the need to answer questions that look beyond the nuclear family or the household as an economic unit to explore interdependency between generations. Analytical techniques need to be adapted to this new understanding of the social world (McDaniel, 1997) and this paper argues that existing research has not always used appropriate data for the research question at hand. Using data from the Generations and Gender Programme (GGP), the analysis reveals that less than 7% of individuals aged 18-35 received financial assistance from their parents and this finding is stable across 10 countries and over time. These conclusions are supported through the analysis of longitudinal data from the GGP for 5 countries and preliminary findings suggest that a very small proportion of individuals receive financial assistance from their family over time. Furthermore this likelihood is not affected by the recipient’s financial circumstances or other indicators of need. Substantively, the findings point to one of two conclusions: either intergenerational financial assistance is a marginal and rarely used means of intergenerational exchange or standard measurement practices in international surveys are failing to capture the large amount of intergenerational exchange that is referred to in fields such as housing, social policy and economics.