Are children repaying parental loans? Evidence from Malaysia using matched child-parent pairs

Abstract.

This paper tests whether interhousehold transfers from children to parents in developing countries are motivated by altruism or intended to be repayments of implicit parental loans taken up by children for human capital investment. For the test, a sample of child-parent pairs is constructed by matching the original (parent) and the split-off (child) household information from the Second Malaysian Family Life Survey. The findings of the paper do not support that child-to-parent transfers are entirely altruistic or that they are entirely intended to be repayments of parental loans. For individuals of post-secondary education, we find evidence that money transfers to the parents are mixture of altruistic transfers and repayments.