Working Paper: NBER ID: w2734
Authors: Laurence J. Kotlikoff; John Morris
Abstract: Perhaps no single statistic raises more concern about post War changes in the U.S. family than the proportion of the elderly living alone. Since 1940 the proportion of elderly living alone and in institutions has risen dramatically. While demographics appear to explain much of the change in the living arrangements of the elderly, the rising income of the elderly is viewed by many as the chief or at least a chief reason why the elderly live alone. The analyses underlying this view have not, however, considered the incomes and preferences of the children of the elderly. This paper presents a model of the joint living arrangement choice of parents and children. It then uses a new set of data to consider how the preferences and income positions of the elderly and their children influence the living arrangements of elderly parents. The findings suggest that the preferences and income levels of children may be important factors in explaining why so many of the elderly live alone.
Keywords: Elderly; Living Arrangements; Income; Preferences
JEL Codes: I12; J14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Children's income (J13) | Probability of shared living arrangements (R21) |
| Parents' income (I24) | Probability of living alone (C29) |
| Parents' income and Preferences of parents and children (D19) | Living arrangements (R21) |
| Children's income and Preferences of parents and children (D15) | Living arrangements (R21) |