The impact of parental transfers on living standards of married children

The paper focuses on the effect of various forms of parental assistance (i.e. financial support to meet living expenses, purchase of housing; funding education) on living standards (i.e., possession of material goods). Analysis of the data from the Israeli sample reveals a considerable variation among families with regard to parental support. The data demonstrate that support is more prevalent among families of high socioeconomic origin (and of smaller size) than among families of low socioeconomic origin. Parental support, in turn, significantly affects current standard of living (i.e. number of household goods in possession of the family). That is, families that have benefited from extensive support are more likely to maintain higher living standards net of social resources and labor market outcomes. The effect of support for education is mediated via labor market outcomes, whereas the impact of support toward purchase of home is direct and net of labor market rewards. The findings revealed by the analysis suggest, rather strongly, that parental transfers not only reproduce but may actually increase economic inequality across generations. The meaning of findings are discussed in light of theories of social stratification and inequality.