How Private Transfers Respond to Parental Income in Urban and Rural China?

Taichang Chen, Renmin University of China

Population ageing and the modernisation process have taken place in China for decades. There can be little doubt that intergenerational relationships will be reshaped over time, posing challenges to family support of old age. Through the use of a variety of quantitative methodologies and nationally representative dataset, this study aims to provide robust estimates of how the increase in public programmes is influencing private transfers in China. The analysis of the factors that determine the incidence of receipt of transfers from children suggests that inter-generational transfers in China tend to target old parents that are in greater financial need. Moreover, the analysis of determinants of the size of transfer suggests that although altruism and exchange motives co-exist, the exchange motive dominates inter-generational transfers in urban China. This study argues that a gradual increase in public transfers will not crowd out private transfers, and, in cities, may actually strengthen private transfers.