Family Support in Hard Times: Dynamics of Intergenerational Exchange after Adverse Events

Abstract

We use event studies to examine changes in intergenerational financial transfers and informal care within families following wealth loss, job exit, widowhood, and health shocks. We find sharp reductions in giving to adult children following negative shocks to parents’ wealth and earned income, particularly in low-wealth households. Giving also decreases with some health shocks and increases following spousal death. Meanwhile, children of low-wealth households increase financial transfers to parents following adverse shocks in parental households and children of both high- and low-wealth households sharply increase their provision of informal care to parents following a wide range of adverse shocks.