Ami Ko from Georgetown University will present Intergenerational Time Transfers: Altruism and Strategic Motives within the Family (with Chao Fu and Chamna Yoon)

Abstract: In the U.S., families play a central role in the provision of childcare and long-term care (LTC), with grandparents frequently assisting their adult children with childrearing and middle-aged children providing much of the care for elderly parents. This paper studies the motives underlying these intergenerational time transfers and evaluates their policy implications. Using HRS data and exogenous variation in childcare costs, we first document evidence consistent with strategic implicit contracting, whereby early childcare assistance is repaid with later LTC. To quantify the underlying mechanisms and assess policy impacts, we estimate a dynamic model of an extended family who interact over care arrangements and bequests with both altruistic and strategic concerns. The estimated model shows that strategic reciprocal motives play a central role in shaping the intertemporal linkage between childcare and LTC. These mechanisms generate meaningful policy spillovers across care sectors. In particular, childcare subsidies that reduce grandparental involvement crowd out future family-provided LTC, while conditional expansions of old-age social insurance that reward past childcare provision reinforce the family’s role in both care sectors.