Working Paper No. 08-01
Who Cares for the Elderly? Intrafamily Resource Allocation and Migration in Mexico
July 2007 (First Submitted January 2008, Revised June 2008, Revised August 2010)
This paper considers the intrafamily allocation of elderly care in the context of international migration where migrant children may be able to provide financial assistance to their parents, but are unable to offer physical care. To investigate the interaction between siblings, I take a non-cooperative view of family decision-making and estimate best response functions for individual physical and financial contributions as a function of siblings' contributions. I account for the endogeneity of siblings' contributions and individual migration decisions by using siblings' characteristics as instrumental variables as well as models including family fixed effects. For both migrants and non- migrants, I find evidence that financial contributions function as strategic complements while siblings' time contributions operate as strategic substitutes. This suggests that childrens' contributions toward elderly care may be based on both strategic bequest and public good motivations. In addition, the results from a simulation generating an exogenous switch in child's migrant status show a decrease in time and potentially even financial contributions for elderly parents.
JEL classification: J14, O15, D13, F22
Keywords: elderly care; intrafamily allocation; migration