Buying Out of Familial Obligation: The Tradeoff between Living with versus Financially Supporting Elderly Parents in Urban China

Haiyan Zhu, University of Michigan

For Chinese families, co-residence with elderly parents is both a form of support and a moderator of financial support. Previous literature on the intergenerational support in Chinese societies has studied either co-residence or financial support, but not the joint nature of the two forms of support. Using a recent dataset (Study of Family Life in Urban China) collected in 1999 in three cities, Shanghai, Wuhan, and Xi’an, we examine whether or not children (especially sons) with high socioeconomic status buy out of fulfilling the obligation of living with parents by providing more financial support. We first perform the analyses by estimating between-family and within-family models. To account for the potential selection bias associated with co-residence, we further treat co-residence and financial transfer as joint outcomes by using endogenous switching regression models.