An exchange motive in upstream intergenerational transfers: evidence from South Korea

This paper examines the exchange motive behind upstream intergenerational transfers from the adult children to their elderly parents in Korea. While the altruistic motive has been extensively studied, evidence on the exchange motive behind private transfers, i.e. that transfers are provided in exchange for the service provided by the recipient, has been relatively scarce. To test for the presence of exchange motive, childcare provided to grandchildren by elderly parents is used to measure service provision. Using a family fixed effect model, we find that elderly parents who provide care for their grandchildren are more likely to receive transfers, and more likely to receive a larger amount of transfer, providing evidence on the operation of an exchange motive in upstream transfers. We further show that this motive operates mainly through regular transfers and not through irregular transfers.