Time and Money: Social Security Benefits and Intergenerational Transfers

I examine the relationship between Social Security benefits, a major component of income in older age, and intergenerational transfers of financial help and caregiving. I find that the net pass-through rate of Social Security benefits from parents to children is about 15 percent, including only monetary inter vivos transfers. Parents with higher Social Security benefits provide more hours of help to children in the form of grandchild care, even though children significantly withdraw caregiving to parents along this dimension. Taken together, these results are consistent with parental altruism and have strong implications for the distributional consequences of Social Security reform.