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Risk-sharing within families: Evidence from the Health and Retirement Study

Serife Akin and Oksana Leukhina ()

Journal of Economic Dynamics and Control, 2015, vol. 52, issue C, 270-284

Abstract: We report strong empirical support for the presence of self-interest-based risk sharing within extended families in the U.S. A standard model of self-interest-based risk sharing predicts that the share of current family income consumed by a child positively depends on that child׳s permanent income. It follows that parental transfers to children that are expected to earn more over the period of risk-sharing arrangements should exhibit less sensitivity to the recipient׳s income fluctuations. We test this distinguishing prediction of self-interest-based risk sharing by exploiting the variation of transfer receipts among siblings, observed over 17 years of longitudinal data spanned by the Health and Retirement Study.

Keywords: Risk sharing; Informal insurance arrangements; Inter vivos transfers (search for similar items in EconPapers)
JEL-codes: D1 E2 (search for similar items in EconPapers)
Date: 2015
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Working Paper: Risk-Sharing Within Families: Evidence From the Health and Retirement Study (2013) Downloads
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Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok

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