Published: June 6, 2018


Download: Life Course Centre Working Paper: 2018-05

Authors:

Yangtao Huang, Francisco Perales, and Mark Western.


Non-Technical Summary:

A wealth of social science scholarship has established that better-off parents make greater investments in their children while they are growing up, contributing to social inequalities in child development and outcomes. Yet we know comparatively little about whether or not, and if so how, better-off parents continue advantaging their children when they become adult. While comparatively fewer studies have focused on this life stage, we know from previous studies that parental wealth transfers are an important means through which parents help their grown-up children.

In this paper, we evaluate differences by socio-economic background (SEB) in wealth transfers (i.e. cash gifts) from parents to adult children (age 18 to 40 years) in contemporary Australia, using 15 years of high-quality, nationally-representative household panel data. Substantively, we advance the field by applying a life-course approach to gain novel insights into how differences in parental wealth transfers by SEB evolve over children’s life courses and whether they are contingent on major life-course events (e.g. getting married, having children, buying a house, or experiencing financial strain). Methodologically, we exploit the panel data to implement a more sophisticated and fit-for-purpose analytic approach than that deployed in previous studies.

We find that, on average, children from higher-SEB families are 83% more likely to receive money than children from low-SEB families. In addition, children from higher-SEB families received 79% more money than children from low-SEB families when a transfer was received. The prevalence of parental wealth transfers and their amounts were found to be consistently higher for higher-SEB children than for low-SEB children over their complete adult life courses. In addition, we find that adult children from higher-SEB families receive comparatively more financial support from their parents when they got married, purchased a home, studied full time, and faced material deprivation or financial worsening. The cumulative advantage in parental wealth transfers of being born in a higher-SEB family amounts to approximately AU$14,000 between ages 18 and 40.

Our findings demonstrate that the transmission of parental advantage from parents to their offspring does not end as children become adults or leave the parental nest. Instead, children from advantaged families disproportionately enjoy the benefits conferred by parental wealth transfers over their adult life courses, with evidence that such benefits include the ability to successfully negotiate key life-course events and transitions, and combat extenuating financial circumstances.

Published

February 22, 2018