The effects of an old-age allowance programme on intergenerational interactions in Taiwan: Heterogeneous effects by adult children’s motives for giving

Abstract

This study examines the effects of an old-age allowance programme in Taiwan, the Senior Citizens Welfare Living Allowance (SCWLA), on intergenerational financial transfers, living arrangements and contact, as well as the heterogeneity of its effects by adult children's five types of motives for giving: altruism, exchange, reciprocity, affection, and sense of responsibility. Using 2002, 2004, 2005 and 2006 data from the Panel Study of Family Dynamics, we employed a difference-in-difference individual fixed effect model to compare the outcomes across the treatment (aged 65 and older) and comparison groups (aged 55 to 64) before and after the introduction of SCWLA. Our results indicate that SCWLA crowds in intergenerational contact but does not significantly change financial transfers and co-residence patterns. The increase in intergenerational contact is primarily driven by adult children having lower motives for giving. This suggests that old-age allowances may reduce financial entanglement between adult children and older parents and change the social norm by raising "low motivators'"awareness, respect and concern for elderly. Providing public transfer to the elderly should not be hampered by the fear of distorting family support functions.