Race Differences in Intergenerational Financial Assistance

Abstract

Recent studies consistently report that Whites are more likely than African Americans to receive economic assistance from their families. Explanations of why Whites receive more assistance, however, have not been adequately explored. The current research hypothesizes that financial transfers from parents to adult children are guided by both the needs of children and the resources of their parents. Yet, the majority of prior research has considered the characteristics of only one end of the transfer flow—either the giver or the receiver, but not both. When both needs and resources are taken into account, and when family structure is adequately controlled, it is expected that race differences in the receipt of financial assistance will be reduced or eliminated. Probit models are used to examine the probability of receiving assistance, and a censored regression tobit model examines the amount received.