It is generally believed that intergenerational coresidence by elderly parents and adult children provides old-age security for parents. Though such coresidence is still the most common living arrangement in many countries, empirical evidence of its benefits to parental health is scarce. Using Indonesian data and a program evaluation technique that accounts for non-random selection and heterogeneous treatment effect, we find robust evidence of a negative coresidence effect. We also find heterogeneity in the coresidence effect. Socially active elderly parents are less likely to be in coresidence, and when they do live with a child, they experience a better coresidence effect.
Keywords:Intergenerational coresidence, informal care, elderly health, treatment effect, factor structure model
JEL codes: I12, J1, C31Funding: This research is supported by the Australian Research Council Discovery Project Grant DP110100773. 3
IntroductionIt is widely assumed that living with adult children improves the health outcomes of elderly parents through the provision of valuable family support. Arguably, coresidence is the most comprehensive form of informal care, offering immediate instrumental, emotional, and financial assistance. For generations, intergenerational coresidence has been relied upon to protect the welfare of elderly parents, particularly in developing and middle-income countries where public support systems for the elderly are underdeveloped.Despite the prevalence of informal care by adult children and its indisputable role in today's aging societies (e.g., OECD, 2005), solid empirical evidence of the presumed beneficial role of coresidence with a child is scarce. On the contrary, nationally representative data sets from numerous countries (e.g., the US, Japan, China, and Indonesia) and many recent studies both show worse health outcomes for parents in intergenerational coresidence than for parents living independently.Researchers have discussed various pathways through which intergenerational coresidence may affect parental health negatively. Elderly parents may transfer their resources to adult children (Cameron and Cobb-Clark, 2001;Schroder-Butterfill, 2003;Johar and Maruyama, 2011). Excessive reliance and caregiving burden on children may reduce elderly parents' incentive to invest in their health to extend their life (Maruyama, 2012). Economic development and population aging may have reduced the supply of family support by adult children relative to its demand, which leads to tension and conflict between generations and weakens the bargaining position of elderly parents (Asis et al., 1995;Hermalin, 2000;Giles et al., 2003;Lachs and Pillemer, 2004;Zhang, 2004;Chan, 2005;Newberry, 2010;Teo, 2010 There are three classes of confounding factors that prevent us from applying a simple regression framework: (1) reverse causality, (2) non-random selection, and (3) heterogeneity in the treatment effect. Reverse causality concerns the possibility that coresidence occurs in response to the deterioration of parent...