Spend it, save it, or transfer it?

Abstract

We are the first to study how the resources freed up when a child, child-in-law, or grandchild moves out of a household are reallocated, taking into account the age of the leaver. Using the 2011 and 2013 waves of the China Health and Retirement Longitudinal Study, we document that, on average, the remaining household members save part of the resources freed up by the leaver and consume another part. Differentiating the leavers by age, we find that after the departure of a member of the younger generation aged 0–24, the remaining household members save the resources freed up by the leaver. However, if the leaver is above 24, they spend the freed-up resources. Our results are robust to the use of different specifications, estimation methods, and consumption aggregates. Finally, we observe that remittances directed toward non-resident offspring do not increase after the departure of a member of the younger generation.