Discussion Paper No. 670

ALTRUISM AND THE CARE OF
ELDERLY PARENTS: EVIDENCE FROMJAPANESE FAMILIES
Miki Kohara
andFumio Ohtake

August 2006

The Institute of Social and Economic Research
Osaka University
6-1 Mihogaoka, Ibaraki, Osaka 567-0047, Japan

“Altruism and the Care of Elderly Parents: Evidence fromJapanese Families”
Miki Kohara*, OSIPP, Osaka University, Japan
Fumio Ohtake, ISER, Osaka University, Japan

Abstract
This paper analyzes what adult children would do for their parents were they frail andin need of long-term care. Focusing on the special case of parents’ illness, the paper theninvestigates altruism in Japanese children. Descriptive statistics show that about 30% of
adult children living separately from their parents provide long-term in-home care, whichsuggests that a significant number of Japanese children supply care. However, detailed
examination reveals that this parental care is not motivated entirely by altruism. We showthat children provide parental care when their parents are wealthy enough to meet thecosts of nursing.

Key Words: Altruism, Informal Parental Care, Within-family Money and Time Transfers,
Home Production
JEL Classification Number: D12, D13, J14*

Corresponding Author: 1-31 Machikaneyama, Toyonaka, Osaka, 560-0043, Japan.
Phone: 81-6-6850-5622. E-mail: kohara@osipp.osaka-u.ac.jp.
The authors are grateful to Naohito Abe, Kenn Ariga, Mototsugu Fukushige, Fumio
Hayashi, Charles Yuji Horioka, Yasushi Iwamoto, Takashi Kurosaki, Shuzo Nishimura,
Makoto Saito, Katsuya Takii, and seminar participants at Hitotsubashi University, Kyoto
University and Osaka School of International Public Policy, Osaka University for theirhelpful comments. The research for this paper was supported by Grant-in-Aid for
Scientific Research number 12124207 from the Ministry of Education, Culture, Sports,

1

I. Introduction
As the population ages, more elderly people need help with daily living. The frail
elderly can live in formal care facilities such as welfare facilities, health care facilities andhospitals, or can live independently using formal care services such as home-visitations,drop-in centers and short-stay facilities. According to the 2001 Reports of Survey on Care
Service Providers (Ministry of Health, Labor and Welfare, Japanese Government), 2.76%
of the elderly over the age of 65 years live in institutions, such as health care facilities forthe elderly (48.5%), Welfare facilities for the elderly (35%), and hospitals speciallydesigned for the elderly (16.5%).
Alternative carers for the frail elderly are their children. As is well known, many
Japanese elderly co-reside with their children and their family. The co-residential rate ofthose aged over 65 years is 48.4%, according to the 2001 Comprehensive Survey of Living
Conditions of the People on Health and Welfare (Ministry of Health, Labor and Welfare).
This figure is much higher than in other OECD countries, although it has fallen
dramatically during the last two decades (70% in 1990 and 80% in 1980). Children havevarious motivations to offer parental care, depending on the parents’ and the children’s
circumstances. Parents’ health and living conditions, and children’s living and working
conditions as well as their innate characteristics can affect children’s decisions. The
availability of public care systems in residential areas may also be a factor.
Two types of motivation have been mainly examined in the economics literature, one
based on exchange, the other on altruism. Both motivate children to care for their parents.

Science and Technology of the Japanese Government.

2That is, we cannot distinguish between the two by looking simply at the strength of familyties. We need to examine the differential: children with the exchange motive would notcare for their parents unless the parents had something to exchange, whereas altruistic
children would do so regardless of presents from the parents.
The present paper takes up the special situation where parents need long-term care andanalyzes motivations of time and money transfers from children to their parents. The
paper first describes the theoretical model of altruistic children facing their frail elderly
parents’ need for care. The comparative statics give us the test implications of altruism.
The latter half of the paper investigates the existence of altruism empirically, using aunique survey of Japanese households, The Attitude Survey on Child-care and Long-term
Care of Parents, conducted by the Cabinet Office of the Government of Japan in Octoberand November 2000. The survey asks adult children who have not yet experienced
parental care needs, “What would you do if your parents needed help in daily life?” The
options for the children include money transfers and giving up time to care for theirparents.
The question about future possibilities makes it possible to collect enough responses
for an empirical investigation while avoiding the common problem with microdata that,unless the sample is targeted, few individuals in the sample face the long-term care of
their parents at the time the survey is undertaken. If the survey targets such a sample, thenwe cannot compare the results with those of a non-targeted sample. The question about
the future also makes it possible to examine children’s willingness or intention tomaintain the status quo. If we examine the sample of individuals whose parents need care
now while at the same time undertaking other economic activities such as co-residing and3

working, we cannot strictly distinguish cause and effect. This has been a major
endogeneity problem in empirical studies of children’s care giving.
The present paper is one of the few studies attempting to solve this endogeneity
problem by utilizing such a unique aspect of the data set. Moreover, the transfers
investigated in this paper cost not only money but also time. Thus, we can examine
children’s overall behavior on transfers to their parents using a general empirical method.
Another contribution of this paper is to comment on the existence of altruism inJapanese families, which are usually thought to have strong ties. As mentioned, strong
family ties do not always mean altruistic behaviors by family members. They may be theresult of selfish motivation. The results for Japan should be an interesting example forresearch on altruism and within-family transfers in other countries. The implications areimportant not only for economic but also for sociological studies on household links.
Among the main findings of the paper, the descriptive statistics show that about 30%
of children living separately from their parents offer parental care when the parents needit. However, further investigation reveals that this parental care is not inspired by altruism.
That is, children give parental care when their parents are wealthy enough to meet the costof their demand for nursing.
The paper is organized as follows. The next section summarizes the existing literature
on intergenerational transfers. Section III describes the theoretical model of parental careby altruistic children and derives the test implications on altruism. Section IV explains theempirical models used to test for the altruism implied by children’s parental care. Section
V provides an overview of the Japanese elderly situation using macrodata on money andtime transfers within families. Section VI explains the data used in the paper, and Section

4

VII reports the results. The last section concludes.

II. Existing Literature
Altruism is one of key factors in explaining intra-family transfers. Altruistic
households maximize overall family utility subject to a family budget constraint, so thatchildren transfer more money to parents in financial difficulties, once controlled forchildren’s income. Schoeni (1997), using a Panel Study of Income Dynamics, finds someevidence of altruism among U.S. families. Bernheim et al. (1985) explainsintergenerational transfers by not altruism but strategic bequest motives. They show thatthe number of parent-child contacts increases with parental wealth, since wealthy parents
can derive care or attention from their children using the possibility of future bequests.
Cox (1987) finds similar behavior, accounted for by “exchange motives”: parents transfer
money in exchange for care by their children. Exchange motives, which broadly include
strategic bequest motives, indicates that children are more likely to care for their parents
when their parents have assets to bequeath in exchange. Cox and Rank (1992) find further
evidence to support exchange motives. Cox and Stark (1995) show that visiting,compared to money transfers, is more direct and visible to parents to secure the exchangeor to demonstrate successfully. 1 Thus, not only money but also time is an important

1

As another explanation, Cox and Stark (1995) point out the existence of a demonstration

effect: adult children who have (grand) children visit their parents more frequently,
expecting that their own children (the grandchildren of their elderly parents) will dolikewise.

5

transfer within a family. The present paper examines transfers from a child to the parent in
a sense of time as well as money.
It is difficult to examine the cause and effect of child-parent transfers. There are many
general transfers and many simultaneous decisions for economic agents. One way todiminish the difficulty is to focus on a special change occurred in family, say illness of aparent. The study by Bernheim et al. (1985) focuses on the attention paid by children to
their parents when they are in poor health. They show that children do not focus more
attention on their parents when they are in poor health unless the parents are wealthy andsupport strategic bequest motives. Pezzin and Schone (1997) also reject altruism (income
pooling) by showing that informal care given by children increases with household
non-labor income. By contrast, Sloan et al. (1996) find that children care more forcognitively unaware parents, and conclude that wealth is not important if one controls forparents’ awareness. Sloan et al. (1997) further examine hours of care using better data on
parents’ assets and incomes and obtain the same result. Pezzin and Schone (1999) use an
endogenous switching model to examine whether daughters provide informal parental
care and supply labor. They find that parents’ assets do not affect the provision of
informal care by children, but that other characteristics of parents greatly affect informalcare provision. The present paper takes up a special situation where parents needlong-term care.
There is no direct examination of child-parent care-giving, nor consistent result on theexistence of altruistic motives behind general intergenerational transfers in Japan.
Hayashi (1995) rejects the existence of mutual altruism by finding no evidence ofconsumption neutrality between child-households and parent-households. Supporting6

non-altruistic behaviors, Ohtake (1991), Ohtake and Horioka (1994), Yashiro (1993), andKomamura (1994) find a positive relationship between parents’ economic situation andco-residence with children. In contrast, Ando et al. (1986), Takayama and Arita (1996),
and Iwamoto and Fukui (2001) show a negative relationship between them.
The reseaches on Japanese households often have data difficulty: we can hardly obtainadequate micro-data for empirical investigations. All the existing Japanese literature
lacks information on either parents’ or children’s characteristics. The present paper
utilizes both parents’ and children’s characteristics of Japanese families. It would give aninteresting result for on-going arguments on exchange motives.

III. Theoretical Model of Parental Care
We describe a child’s transfer behavior to the parent who needs long-term care. Generalfamily-transfer models are converted into time and money transfers from children to theirparents. Our focus is to examine the demonstration of altruism in the specific case of carefor frail elderly parents. Therefore, we derive the null hypothesis of the existence ofaltruism from children towards their parents, based on the theoretical model of altruistic
children’s behaviors, but not based on mutual altruism or family bargaining, which areused in some analyses of family transfers.
Suppose that children ( k ) and parents ( p ) live independently. When the parents
become ill and need help in daily life, their children decide whether to take care of their illparents or/and give financial support. Parents can buy care services in the market and/or
receive care services from their children. Parents’ Health, G , is “produced” by market
care services ( h hours) and children’s supply of care ( hk hours):

7

G = G (h, hk ) = eh + hk ,(1)

where e denotes the productivity of children’s parental care of their parents.
Children cannot choose their work hours but can allocate the remaining hours, say 24
hours minus work hours, to leisure time ( lk ) and parental care ( hk ).2 Standardizing total
feasible hours as one, the children’s time constraint is:

hk = 1 − lk .

(2)

At the same time, children decide whether to support their parents financially. The
financial transfer to parents is denoted as sk , and the budget constraint for children is:y k = xk + s k ,(3)where xk is the children’s own consumption of goods and services.
Parents receive income ( y p ) and financial transfers from children ( sk ), and distributethem between the parents’ own consumption ( x p ) and market care services ( h ). 3
Designating the price of market long-term care services relative to private consumption
as p , the parents’ budget constraint is:s k + y p = x p + ph .

(4)

The utility for children and for parents are respectively written as:

2

U k = U k ( xk , l k , G) ,(5)

U p = U p ( x p , G) .

(6)

The assumption of no work hours changes may be too strong although people cannotchange work hours easily, at least in the short run. We use this assumption as ourempirical investigation cannot control for labor decisions because of data limitations.
3

Parents’ income includes all kinds of money receipts (e.g., pension and dis-savings).

8

The G in utility is parents’ health described as (1) and “family public goods”. The utility
including family public goods and the private goods of each household is often used infamily-transfer models. In a framework of children-parent transfer, Cox (1987) andErmisch (2003) denote this as “services” that children offer to their parents, and Pezzin
and Schone (1999) denote this as “parents’ physical health or well-being”.4
A family maximizes the following family welfare function subject to the constraints (2)(3), and (4):W = U k + µU p ,(7)

where µ is a parameter taking the value between zero and one. This is the “collectivemodel” described by Chiappori (1992). The parameter, µ , shows the weight of parents’utility relative to children’s utility, which indicates the degree of altruism of children to
their parents.
The first-order conditions of maximizing (7) subject to the constraints (2), (3), and (4),together give the following relationships:µU xp = U xk ,(8)

µU xp = p −1 (U Gk + µU GP ) , and(9)(U Gk + µU GP ) = e −1U lk .
4

(10)

The specification including “public family goods” of G does not alter the test

implications on altruism obtained from what follows. That is, even when the child does
not get utility from the parent’s health production, say U k = U k ( x k , l k ) , but when thefamily maximizes family utility (7) with the parent’s utility (6), we obtain the exactly
same comparative statics shown in Table 2.

9The subscript indicates the partial derivative, and we assume these are positive undernormal assumptions ( U x > 0, U G > 0, U l > 0) . The marginal utility of goods for children
must be equal to the (weighted) marginal utility of good for parents, which must be equal
to the sum of marginal utilities of long-term care production for children and parents
evaluated at the relative price of health care. The sum of marginal utilities is further equal
to the marginal utility of leisure for children discounted by their productivity.
Assume that x , l , and G are additively separable in utility, the second derivativesof utility are negative ( U xx < 0,U ll < 0,U GG < 0 ), and the cross-derivatives are all zero.
The second-order condition is that the bordered Hessian determinant is positive:kpkp
D = −e −1U llk (U GG+ µU GG+ µU GG)(U xxk + µU xxp ) − eµp 2U xxk U xxp {(U GG) + e −2U llk } > 0 .

Comparative statics show how parents’ and children’s income affect children’s
behaviors of money- and time-giving. First, the effect of parents’ income on children’s
supply of parental care is written as:
∂hk
1
k
p
= {pµU xxk U xxp (U GG+ µU GG)} < 0 .
∂y p D(11)

Altruistic children supply more care to poorer parents. Likewise, the effect of parents’income on children’s money transfers is written as:
∂s k
1
k
p
= {e −1U llk U xxp (U GG+ µU GG)} < 0 .
∂y p D(12)

Altruistic children give more money to poorer parents. In other words, non-altruistic
children give more time or money as their parents become richer. For example, a child
expecting an exchange for “presents” from the parent gives more parental care.
The effect of children’s income on their money transfers to their parents is:

10

∂s k
1
k
p
k
p
= − U xxk e −1U llk (U GG+ µU GG) + µp 2U xxp {e −1U llk + e(U GG+ µU GG)} > 0 .
∂y k
D

[

]

(13)

The increase in children’s income raises their own consumption, and accordingly theirutility. For equalities to hold in the first-order conditions, children give more money totheir parents and raise the parents’ consumption of goods and long-term care services.
Thus, the wealthier altruistic children would give more money to their parents.
In contrast, the effect of children’s income on their parental care supply is:
∂hk
1
k
p
=
pµU xxk U xxp (U GG+ µU GG) < 0.
∂y k D{}(14)

This is exactly the same as (11). That is, as a child becomes richer, the family can afford topurchase more market care services to produce public goods of parental health, without
sacrificing[

thechildren’s

leisuretime(Indeed,

]

∂h
1
k
p
=
− pµU xxk U xxp {e(U GG+ µU GG) + e −1U llk } > 0 ). An increase in market care services∂y k Dand thus an increase in family public goods of parental health is met with an increase inchildren’s leisure time, which is a decrease in their parental care time.
Table 2 summarizes the test implications on altruism. Under altruism, the effects of theparents’ income on children’s time and money-giving are negative, and the effect of thechildren’s income on the children’s time-giving is negative but on money-giving is
positive. Moreover, parents’ income and children’s income must affect the altruistic
children’s time-giving (nursing) in the same way.5
5

The obtained test implications are similar to those shown in past literature on exchange

motives such as Cox and Rank (1992), Cox and Stark (1995), Pezzin and Schone (1997),
Sloan et al. (1996, 97), where exchange motive shows a positive relationship between

11IV. Econometric Model of Parental Care
Children’s decisions about nursing and financial support may depend on each other.
This does not change theoretical implications derived in the last section whereindividual’s optimization problem is solved simultaneously for two decisions. Thismatters, however, in the empirical investigation. The same individual makes two
decisions, so that they are probably correlated with each other.
We account for this possibility by allowing the disturbances of the equations
representing the two decisions to be correlated with each other. The decisions on nursing( h ) and money-transfer ( s ) are described as follows:
y j = xβ j + ε jj = h, s(15)

y j = 1 if y j * > 0 and
y j = 0 otherwise
E (ε h ) = E (ε s ) = 0

where

Var (ε h ) = Var (ε s ) = 1 .

(16)

Cov (ε , ε ) = ρhs

We drop a subscript k in the theory, since nursing and money-transfer are both children’s
decisions. Assume that the probability of both nursing and money-transfer, which is
Pr ob( y h = 1, y s = 1 | x; β h , β s , ρ ) = Φ , has a bivariate normal cumulative distribution

parent’s richness and child’s care-giving. The implications are different from those of
mutual altruism, which generates income pooling (risk sharing) in households within
extended families. In this case, transfers are unaffected by financial situation either ofparents or children, once one controls for the overall extended family economic situation.

12

function with mean [0,0]. We estimate these two equations by using a bivariate probit
model.

The

log

likelihood

is

the

summation

of

Φ

over

individuals:nln L = ∑ ln Φ ( wih , wis , ρ i* ) , where n is a total number of individuals, wij = qij ⋅ t i j ,
i =1

qij = 2 y ij − 1 , t i j = x i β j , ρ i* = qih ⋅ qis ⋅ ρ , qij = 1 if y j = 1 , and qij = −1 if y j = 0 .
The explanatory variables, x , include parent’s and children’s economic situations. If
altruism from children toward their parents exists, we will find the same four signs asshown in Table 2.
The most frequently calculated marginal effect is the unconditional marginal effect onchoosing both nursing and money-transfer, which is ∂Φ / ∂X = ∑ g j β j , where
⎡ s
⎤
⎡ h
⎤
n
n
w − ρ i* wih ⎥w − ρ i* wis ⎥and g s = ∑ φ ( wis ) ⋅ Φ ⎢ i. Note, however,g h = ∑ φ ( wih ) ⋅ Φ ⎢ i
⎢
⎢
*2 ⎥
*2 ⎥
i
i
⎣ 1 − ρi ⎦⎣ 1 − ρi ⎦that children do not have to offer both physical and financial support. Some children may
use their own time to care for their parents, while others may offer substantial financial
help. Hence, rather than compute the unconditional marginal effect, we calculate themarginal effects on choosing either nursing or financial support (assuming that the othertype of support is not offered). These effects are ∂E[ y h = 1, y s = 0 | x] / ∂x and∂E[ y h = 0, y s = 1 | x] / ∂x . In addition, we calculate the conditional marginal effects on
one form of support when the other form of support is given. These effects are∂E[ y h | y s = 1, x] / ∂x and ∂E[ y s | y h = 1, x] / ∂x .
If the error terms of the two equations for h and s are unrelated, in which case, ρ = 0 ,we can simply calculate the unconditional marginal effects on each form of support. In
this case, we can estimate an ordinal qualitative response model such as a probit or logit

13

model for nursing and money-giving independently, rather than a bivariate probit model.
Hence, we first estimate the two equations using a bivariate probit model and test whether
the error terms are correlated. If they are not correlated, we calculate the unconditional
marginal effects. If they are correlated, we calculate the conditional marginal effects
described above.

V. The Present Situation of the Japanese Elderly
The Family Income and Expenditure Survey (FIES, conducted by the Statistics Bureau,
Management and Coordination Agency) reports money transfers within Japanesefamilies by type of income source, and includes workers, those in agriculture andfisheries, the self-employed, pensioners, the unemployed, and the independent elderly.
According to the 1999 FIES, people receive money decreasingly as they age, but do soincreasingly once they reach 60 (Figure 1-A). People give money increasingly once theyreach 40, peaking at 50 years of age (Figure 1-B). The figure excludes money transfers tostudents within families and so mainly indicates financial help for dependent adults. The
figures show that children care for their parents financially when the parents retire.
The transfer of time is also important within families. Table 1 shows the age ofcare-givers and care-receivers based on the CSLC of 2001. Care-giving increases amongpeople in their fifties. Seventy-year olds are cared for by carers in the same age group. By
contrast, eighty- and ninety-year olds are cared for by carers in their fifties or sixties. Thissuggests that spouses are the prime candidates for care giving, followed by children or achild’s spouse. In addition, most carers are female, which indicates that informal care is
primarily the work of wives, daughters, or daughters-in-law. The same report shows that14

19.9% of carers are adult children, 22.5% are the adult children’s spouses, and 25.9% are
spouses.
The Survey on Time Use and Leisure Activities conducted by the Statistics Bureau,
Management and Coordination Agency, reports that the average time spent being cared
for is 95 minutes per day for females and 45 minutes for males in 2001. Note, however,that the average hours are misleading as care hours range widely depending on ADLs.
According to 2001 CSLC, 37.9% of the elderly need less than two hours help per day,
10% need 2-3 hours, 10% need half a day, and 27.4% need care almost all day long.
As an internationally pioneering policy, Japan’s public long-term care insurance wasintroduced in April 2000. One of the main purposes of this public mandatory insurance isto keep down the increased financial cost of caring for the elderly in an aging society, by
reducing the number of elderly staying in hospitals for an excessively long time and byencouraging informal family care at home with home-help services. Generally,
institutional care costs more than home care. The purchase of home help services islargely covered (10% co-payment) by the new insurance. The new insurance policy may
have affected the utilization of formal care and offers of family care. The results we show
in this paper, which utilizes the survey conducted in fall 2000, reflect the situation after
the implementation of the new public insurance.

VI. Data
A. The data

The present paper uses The Attitude Survey on Childbirth, Child Care and Long-term
Care for Parents (hereafter, ASCCL) conducted in October and November 2000. The

15

survey asks married women aged between 20 and 49 about childcare and parental care in
the past, present, and future. Not only are carers surveyed, but independent members of
their families are also surveyed.6
The main advantage of using these data for our analysis is that the survey asks children
about caring in the future for parents who currently do not need long-term care. When
only current care is asked about, insufficiently large samples of those in need of long-termcare are obtained, because there are a limited number of such people in the country.
Because the ASCCL asks about the possibility of future care, it provides sufficient
observations for an empirical investigation. Although a plan may not show an actual
outcome, this does not defeat the purpose of our study, which is to analyze children’s
willingness to take care of their parents.
In addition, the question about the possibility of future care partially solves theendogeneity problem of living arrangements, which in previous papers was found toaffect results. That is, we can analyze the outcomes (future behavior) while treating thecurrent situation as given. As do theoretical models, we focus on the behavior of children
living separately from their parents. We cannot distinguish between the cause and effectof family formation and various decisions on long-term care if we included the intention

6

More specifically, the data are obtained from a study on the aging society, directed byProfessor Tachibanaki of Kyoto University, as one of the New Millennium Projects of the
Economics and Social Research Institute, at the Cabinet Office. The respondents are
randomly chosen through a two-step stratified method. Of the 5,000 questionnaires
distributed, 1,493 (29.9%) replies were obtained.

16

of dependent children, who may co-reside, to provide future long-term care.
Like all sample surveys, however, the ASCCL has the disadvantage of being a limited
selected sample. We checked that the ASCCL sample was not biased by comparing it withother large samples of well-known Japanese data, the Employment Status Survey(Shugyo-Kozo-Kihon-Chosa) conducted by the Statistic Bureau, Management andCoordination Agency in 1997. We limit the whole sample of the Employment Status
Survey to the same age group as that in the ASCCL for the purpose of comparison.
According to the Appendix Table, the ASCCL sample distribution is very similar to thatof the Employment Status Survey, although the educational attainment of ASCCL
respondents, who are daughters or daughters-in-law, and their total household incomes,
are slightly higher than those reported in the Employment Status Survey. In addition, there
are more social and welfare worker respondents in the ASCCL, which may cause theresults to favor altruism.
B. The variables

The ASCCL examines the characteristics and situations of the adult child’s(respondent’s) family and living parents; both the wife’s and the husband’s, and eachmother and father, separately. The survey asks children what they would do for eachparent, not yet in need of long-term care, if that parent needed long-term care. We treat
parents’ answers as different observations, and the total sample to be analyzed thus equals
the number of living parents who are not yet in need of care.
With regard to future informal care, the survey asks, “What would you do if yourparent needed long-term care?” The possible responses are: (1) care at home; (2) care in
an institution; (3) give money; (4) buy formal care services; and (5) do not know. More

17than one answer could be chosen. We define a binary dummy variable for the child’s careprovision, which takes the value of unity if (1) is chosen. Similarly, a binary dummy
recording money-transfer takes the value of unity when (3) is chosen.
Important explanatory variables are the economic situations of the parents and thechildren. For the parents, we use information on educational attainment and pension
received. Educational attainment indicates not only the current economic situation but
also past and future economic situations; that is, life-cycle income and assets. A strongly
positive relationship between educational attainment and lifetime income or assets isfound in abundant previous literature in Japan. 7
In the estimation, the father’s number of years of education is treated as the parents’household education level. This is because the father is the main income earner,
particularly among Japanese who were elderly at the time of the survey. However, theestimation results did not change with other specifications of the education variable.
Pension received signals a parent’s present economic situation. Because Japanesepeople receive at least the basic pension according to the mandatory pension system, wedistinguish between those receiving only the basic pension and those receiving the basic
pension plus other pensions. If the parent is in the latter group, a dummy variable for‘basic plus other pensions’ takes the value of unity. For parents who have not yet retired,7

For example, Kasuga (2000) reports that the income and asset holdings of the elderly are

positively related to their educational attainment, using a large set of cross-sectional data
for Japanese households. Tachibanaki and Tanigawa (1990) show that college graduates
are more likely than non-graduates to hold financial assets.

18

the child was asked to report any future pension that the parent might receive.
The children’s economic situation is recorded using the husband’s labor income,household asset holdings, and borrowings. The husband’s labor income is the previous
year’s annual labor income taking 11-category from zero to more than 30 million yen.
Instead of using the husband’s income, we can use annual family total income, which isalso category data. Choice of either income specification does not alter the main results.
To control for carer characteristics, we use the wife’s labor status. Full-time worker
and part-time worker dummies are included and compared to non-working wives. In
addition, educational attainment and age, the number of children, and the eldest child’s
age are controlled for.8 The carer’s residential area also affects behavior. We expected adifference between metropolitan areas and others, using two dummy variables indicating
cities and villages, with metropolitan cities designated by ordinance being the base case.
To control for home ownership, we include dummy variables indicating whether a houseis owned by children, children and parents, or other family members, and one for a rented
house, with the base case being home ownership by parents. Children living in their

8

The existence of the adult children’s children (grandchildren) is used to test for thedemonstration effect shown in Cox and Stark (1995). However, this framework cannot
distinguish the demonstration effect from a time constraint on home production: theexistence of grandchildren indicates more time constraints on the wife’s home production(and accordingly less time for parental care) as well as a greater demonstration effect (andaccordingly more time for parental care). In this paper, we use the grandchildren and theirages simply as control variables.

19parents’ house but separately from the parents might already have received benefits fromthe parents; in exchange for this, those children may offer more care time and/or money totheir parents.
For parents, whether or not they are a couple can make a difference. We control for thisby using a dummy variable indicating that a parent has a spouse. Moreover, we
differentiate between the wife’s parents and the husband’s. Japanese tradition dictates thatthe wife should take care of her husband’s parents. As Oishi and Oshio (2001) explain,
this may place a huge burden on carers, thereby invading their privacy. If the burden isonerous for children, they may not provide informal family care. We can analyze thedifferential burdens borne by care-givers using a dummy variable for the wife’s parent.
The descriptive statistics are shown in Table 3. As mentioned, we restrict the sample toindependent children (living separately from their parents) in order to avoid theendogeneity problem of children’s decisions about co-residence and money and timetransfer. We exclude single people and those whose parents are deceased.9 The sample
size used for estimation is 872.
Before examining the estimation results, we provide a general overview of the data
used. Panel A of Figure 2 summarizes the living arrangements of the sample at the time ofthe survey. Cases in which the parents live with the respondent (children) or other family
members account for 51.79% (14.18 plus 37.61) of the total. The proportion of parents
living in institutions is 0.27%. Panel 2 of Figure 2 summarizes what would happen if the9

It is possible that altruism is biased downwards in our estimation because we restrict the

sample to independent married children.

20parent needed long-term care. A significant proportion of children intend to offer
informal care: about 14% of parents living at institutions, 34% living with spouse, 35%
living with other family members, and 36% living alone (on average, about 30% of thoseresiding separately) would be cared by their children.
There are many “don’t knows” in the sample. Their characteristics are that parents andrespondents are still young, the husband’s income is low, and the wife is not working. We
exclude those responding “don’t know” from the estimated samples, assuming that these
respondents cannot decide their intentions regarding the provision of future care.

VII. Estimation Results
The estimation results are summarized in Table 4. The error terms of the two
estimating equations for nursing and money-giving are negatively correlated at the 1%
significance level, which supports the use of the bivariate probit model.10
The marginal effects from the estimation results in Table 4 are then calculated. First,
column (1) in Table 5-A reports the marginal effects of money-giving without nursing.
The coefficient on children’s income is significantly positive, and the coefficient on extra
pension is significantly negative at the 1% level. The coefficient on parents’ educational
attainment is insignificant but negative. The signs are the same as those shown in the left
column in Table 2.
10

Since parents’ educational attainment may be positively related to their pension

benefits, we also estimate after dropping ‘basic plus other pensions’. We obtained thesame implications of the main variables indicating children’s and parents’ wealth.

21Column (2) in Table 5-A shows marginal effects for nursing without money-giving.
The children’s income reduces nursing by children when they are not giving money. Thiseffect is significant at the 1% level. In contrast, the parents’ educational attainment has apositive effect on nursing by children, which is significant at the 5% level. Larger pension
benefits (that is, larger than the basic pension) have an insignificant but positive effect on
nursing by children. Thus, children offer more nursing time to wealthier parents. Thisimplies a lack of altruism. If Japanese children were altruistic, we would have found thesame signs as those summarized in Table 2. The overall result rejects altruism.
With regard to other significant variables, working wives, especially those working
full time, give less time and more money to parents than do non-working wives. Children
give more time and less money to older parents, and more money to the wife’s parents. In
addition, children living in metropolitan cities give more money to parents, which may
indicate some physical difficulty in parental care by children who live separately fromparents living in rural places.
With regard to the variables on home ownership, children owning their own houses
give less money to the parents, compared to the base case of home ownership by parents.
In other words, children living in a house owned by their parents (but separately fromtheir parents) give more money to their parents. Although this looks like the outcome ofmutual altruism, it also implies the possibility of an exchange motive. That is, children
provide more care for their parents when they receive benefits from their parents in theform of housing.
Table 5-B reports the second type of marginal effects. Columns (1) and (2) report themarginal effects for money-giving in addition to nursing and those for nursing in addition22

to money-giving, respectively. The implications of the results are the same as those forthe results in Table 5-A: children’s income has a negative effect on nursing and a positiveeffect on money transfers. Parents’ educational attainments have a significantly positiveeffect on nursing, but an insignificant effect on financial support. The overall result
suggests no altruism. The effects of the other significant explanatory variables are similar
to those of the variables in Table 5-A and somewhat reinforce the finding that children
living in a house owned by their parents provide more nursing and give more money.
We make several comments on the interpretation of the above results. First, there is apossibility that the answer is just a plan but would not be an actual action when the needfor parental care actually occurred. This does not nullify the results we obtained. We
dropped “don’t know” samples, who are not sure about future plan for parental care.
More fundamentally, our objective is to analyze children’s willingness, and respondent’s
intentions are good enough to be examined.
Secondly, the variable of parents’ educational attainment may indicate not parents’
lifetime wealth and income but other family characteristics, although much of the existing
literature suggests a strong relationship between educational attainment and lifetime
wealth in Japan (see footnote 6). For example, parents’ higher educational attainment
may reflect a smaller number of children in a family. In this case, each child would have agreater burden of parental care either in a monetary or time sense, and would need to offer
parental care. However, the statistics do not show a negative correlation between parents’
educational attainment and the number of children. According to the Japanese Panel
Survey of Consumption, which is the unique panel data on Japanese households,
conducted by the Institute for Research on Household Economics, the average numbers23

of children with a father with 9, 12, 14, and over 16 years of education are 2.45, 2.44, 2.00,
2.50, and 2.52, respectively. With respect to the mother’s years of education, thesenumbers are 2.43, 2.42, 2.42, and 2.75, respectively.
As another possibility, parents with higher education may instill the importance offamily ties, and the child in such families may care for parents more. This might be true,
but it does not explain the differential in the sign of parental education between
money-transfer and time-transfer: why does the child of a parent with higher education
offer less nursing although he/she offers more financial support?
We can conclude that parental care, especially nursing of parents, by Japanese children
is not motivated by altruism. If devoting time is a more positive action than giving money,
non-altruistic motives inspire children to care for their parents. Furthermore, the results ofthis paper apply when parents face the inevitable negative shock of needing long-termcare. Even in the case of ill parents, no evidence of family altruistic behavior is found.
Japanese children do not appear to be motivated by altruism. This tendency could be
growing, as our results suggest, when more wives work full time. According to the
Employment Status Survey (Shugyo-Kozo-Kihon-Chosa), the percentage of full-timeworkers among them increased from 62.4% in 1987 to 67.4% in 1997. If this tendency
continues, informal care supplied by children will steadily decrease.

VIII. Conclusion
This paper has analyzed informal care and money-giving by children to their frail
elderly parents. We first showed the theoretical model of altruistic children’s time andmoney transfers to their parents. The comparative statics revealed implications of24altruism in the form of children’s caring for their frail parents.
Our empirical investigation used data from the unique survey, “The Attitude Survey onChild-care and Long-term Care of the Parents”, conducted by the Cabinet Office of theJapanese Government in 2000. The survey asked children about their future plans forfinancial support and/or parental care in the event that their parents became ill and needed
long-term care. This made it possible for us to solve the endogeneity problem relating tochildren’s parental care and other economic decisions: we were able to examine
children’s decisions about future parental care, holding the present situation as given.
According to the survey, about 30% of children living separately from their parents
provide parental care when the parents need it. Further investigation, however, shows that
this parental care is not motivated by altruism. That is, children give parental care when
their parents are sufficiently wealthy to enable the children to meet their parents’ careneeds. This tendency will increase as more daughters (and daughters-in-law) join the
full-time workforce.
Although the evidence against altruism is rather weak in terms of money-giving, theoverall evidence against altruism remains strong. We should note that giving time is amore positive form of care than giving money, and that altruistic care of parents is notsupported even when parents are physically ill and need help.
The results suggest that we should not rely too much on altruism within families.
Declining family care should be replaced by market care services. This is supported byour results: as dual-income child-couples increase, they are able to give more money totheir frail elderly parents. A potentially large demand for market care services exists andwill possibly increase in the future.

25

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Bunseki. Mimeo, (in Japanese).
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to Doukyo Surunoka?. National Institute of Population and Social Security ResearchWorking Paper Series (J) #4, (in Japanese).
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Elderly Parents. Economic Inquiry 35, 295-308.
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Research Economic Journal 25, 34-57, (in Japanese).

28

(yen)
25000

(yen)

Figure 1-A. Money-receiving amount(per household per month, 1999)

50000

20000

40000

15000

30000

10000

20000

5000

Figure 1-B. Money-giving amount(per household per month, 1999)

10000

0
20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65Head's age

0
20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64
Head's age

65-

Notes. 1) Compiled from the Family Income and Expenditure Survey in 1999.
2) The figure excludes transfers to students in a family.
Table 1. Gender and Ages of informal caregiver and carereceiver
Age of Carereceiver (%)(summary)Allage 40-64
65-69
70-79
80-89
age over 90 age over 65[5.8%][7.2%][28.8%][41.9%][16.4%][94.2%]
Family Caregiver All [% all ages] [100.0%]
Male
23.6
35.5
28.6
29.6
20.0
16.1
22.9
Female
76.4
64.5
71.4
70.4
80
83.9
77.1
-age40
4.2
12.3
12.7
4.0
1.8
4.4
3.8
age40-49
12.7
9.7
7.8
19.3
13.4
2.6
12.9
50-59
29.4
33.1
8.8
18.1
42.6
23.4
29.2
60-69
26.0
33.1
53.7
13.0
18.9
52.5
25.6
70-79
21.5
9.5
17.0
39.8
14.0
14.4
22.2
age over 80
6.2
2.4
5.9
9.2
2.7
6.4
Note. 1) Source: the Comprehensive Survey of Living Conditions of the People on Health and Welfare (CSLC), reported by the Ministry of
Health and Welfare in 2001.

29

Table 2. The effects of income on altruistic children s time and money transfers
Transfers from Children to the Parents
Financial support (s k)Nursing (hk)Parent's Income (Yp)Child's Income (Yk)+-30

Table 3. Descriptive Statistics of "Attitude Survey on Long-term Care"(2000)
872 observations
standard
mean deviation minimum maxmium
Time Transfers (Nursing) ％0.34520.47570
1
Money Transfers ％0.32450.46850
1
Parent education
12.1583
2.6018916
basic plus other pensions
0.6881
0.46350
1
age
66.5080
7.298040
88gender0.49890.50030
1
wife's parents
0.49660.50030
1
no spouse
0.03900.19370
1
Kidhusband's labor income #7.42091.71931
11
wife's working: part-time
0.36700.48230
1
wife's working: full-time
0.16510.37150
1
wife's education
13.6032
1.6082916
wife's age
37.09176.363021
49
child(ren)0.8716
0.334801eldest child's age
8.93587.16420
27
debt #
4.45183.20481
10asset income #3.95182.00231
10homeowner 1 (children）
0.50340.500301homeowner 2 (children and parents）
0.03330.179401homeowner 3 (other family members)
0.01380.116601
rental house
0.38650.48720
1residential area (city)
0.59860.490501residential area (villages)
0.10210.302901
Notes. 1) The variable with # shows category data. Labor income is anual value in yen, 1>none, 2>less than 500,000,
3>500,000-1million, 4>-2m, 5>-3m, 6>-4m, 7>-6m, 8>-8m, 9>-10m, 10>-15m, 11>-20m, 12>-25m, 13>-30m,
14>over 30million. As for debt and asset income, 1>none, 2>less than 1million, 2>-3m, 4>-5m, 5>-7m, 6>-10m,
7>-15m, 8>-30m, 9>-50m, 10>-100m, 11>-120m, 12>more than 120million.
2）Parent's education is the number of years of education the father attained.
3）'Basic plus other pensions' takes one if parents (can) get any pension in addition to the basic one after retirement.
4) Homeowner 1, 2 and 3 indicate the owners are children, children and parents, and other family members, respectively.

31

Figure 2. What will children do when their parent needed long-term care?
Panel A. The present living arrangements of parents, % of 4084 elderly parents
live separately from their adultchild(ren)at institutions
0.27

live together
with theiradult child(ren)with spouse
39.83
14.18
with other family
members
37.61
alone
8.10

Panel B. When the parent needed long-term care,
23.9

14.3

live separately(Care
at institutions)(stay atinstitutions
28.6%)

25.0

with spouse

33.8

21.2

with otherfamily members

35.0

32.5

alone

36.4

live
together& care athome(stay athome
65.1%)"Don't Know"(33.1% of the whole responses)
Note. The number above an arrow in Panel B shows % of moving out from each box.

32

Table 4. Children's Decisions: Nursing and/or Financial Support

Dependent variable: Yes/No (=1/0) if children are providing either support
Parenteducation
basic plus other pensions
age
genderwife's parents
no spouse

Kidhusband's labor income
wife's working: part-timewife's working: full-timewife's education
wife's age
child(ren)eldest child's age
debt
asset income
homeowner 1
homeowner 2
homeowner 3
rental house
residential area:cityresidential area:village
constant

Number of observations
Log likelihood
Wald Statistic
ρ:correlation of disturbances in (1) & (2)Likelihood Ratio Test of H0:ρ=0 (χ2(1))（2）Financial Support-0.0096(0.0202)-0.3289 ***(0.1002)-0.0123(0.0109)
0.0113(0.0978)
0.1834 **(0.0939)-0.3819(0.2701)
0.1314 ***(0.0382)
0.3614 ***(0.1102)0.7256 ***(0.1418)-0.0089(0.0338)-0.0031(0.0164)
0.1288(0.1707)-0.0135(0.0133)
0.0008(0.0235)
0.0463(0.0297)-0.6554 ***(0.2271)-0.5438 *(0.3302)-0.9580 **(0.4473)-0.4376 **(0.1968)-0.2431 **(0.1050)-0.3055 *(0.1737)
0.1211(0.7425)（1）Nursing
0.0394 **(0.0199)-0.0653(0.0993)0.0276 ***(0.0104)-0.1103(0.0961)-0.0289(0.0921)-0.0727(0.2377)-0.0535(0.0348)-0.4900 ***(0.1067)-0.5500 ***(0.1421)-0.1008 ***(0.0330)-0.0207(0.0157)-0.2739 *(0.1662)0.0095(0.0126)
0.0121(0.0230)
0.0097(0.0291)-0.4219 *(0.2250)-0.4449(0.3198)
0.1872(0.4096)-0.4244 **(0.1956)-0.0663(0.1052)
0.1941(0.1672)
0.6622(0.7123)872-1035.634
131.73***-0.1906
9.731***

Notes. 1）Estimated by bivariate probit model.
2）See the text and footnotes of Table 3 for details on data description.
3) Standard errors are shown in parentheses. *, **, *** indicate the coefficient is significant at 10%, 5%, 1%
significance level, respectively.

33

Table 5. Calculated Conditional Marginal Effects (CME) on Children's Money and Time Transfers to the Parents
based on the results in Table4.
A.
B.
CME on providing one form of support in
CME providing one form of support in cases
cases of not providing the other supoortof providing the other support(1)Financial support (2) Nursing without(1)Financial support (2)Nursing in addition
without nursing
financial support
in addition to nursing to financial support

Parenteducation
basic plus other pensions
age
genderwife's parents
no spouse-0.0064(0.0056)-0.0748 ***(0.0291)-0.0059 **(0.0030)
0.0140(0.0270)0.0481 *(0.0259)-0.0815(0.0589)0.0114 **(0.0059)
0.0202(0.0285)0.0086 ***(0.0031)-0.0302(0.0283)-0.0271(0.0272)
0.0135(0.0742)-0.0013(0.0064)-0.1107 ***(0.0340)-0.0027(0.0035)-0.0012(0.0307)0.0564 *(0.0296)-0.1064 *(0.0612)0.0125 *(0.0066)-0.0369(0.0335)
0.0085 **(0.0035)-0.0358(0.0315)-0.0011(0.0303)-0.0405(0.0721)0.0379 ***(0.0104)
0.1435 ***(0.0325)
0.2687 ***(0.0483)0.0081(0.0093)0.0014(0.0045)0.0574(0.0414)-0.0043(0.0037)-0.0010(0.0065)0.0104(0.0082)-0.1136 *(0.0599)-0.0976(0.0697)-0.1785 ***(0.0481)-0.0668(0.0518)-0.0531 *(0.0296)-0.0861 **(0.0387)-0.0281 ***(0.0105)-0.1590 ***(0.0287)-0.1875 ***(0.0282)-0.0256 ***(0.0098)-0.0051(0.0047)-0.0905 *(0.0543)0.0039(0.0038)
0.0031(0.0068)-0.0024(0.0086)-0.0385(0.0642)-0.0799(0.0814)0.1321(0.1516)-0.0681(0.0552)
0.0092(0.0307)0.0873(0.0556)

0.0390 ***(0.0122)0.0945 ***(0.0375)
0.2292 ***(0.0558)-0.0072(0.0106)-0.0019(0.0051)
0.0282(0.0509)-0.0038(0.0042)0.0008(0.0074)
0.0150(0.0093)-0.2221 ***(0.0690)-0.1497 *(0.0589)-0.1929 ***(0.0514)-0.1490 ***(0.0558)-0.0806 **(0.0339)-0.0805 *(0.0456)-0.0116(0.0117)-0.1386 ***(0.0339)-0.1332 ***(0.0391)-0.0336 ***(0.0109)-0.0070(0.0052)-0.0890(0.0605)
0.0025(0.0042)0.0040(0.0076)
0.0053(0.0096)-0.1678 **(0.0725)-0.1426 **(0.0676)0.0143(0.1388)-0.1533 ***(0.0587)-0.0331(0.0349)
0.0514(0.0591)0.22920.25690.23930.2607

Kid
husband's labor income
wife's working: parttime
wife's working: fulltime
wife's education
wife's age
child(ren)eldest child's age
debt
asset income
homeowner1
homeowner2
homeowner3
rental house
residential area:cityresidential area:village
Probability of (1)/(2) given
all explanatory variables

34

Appendix Table. Comparison of 2000 Attitude Survey on Child-care and Long-term Care (ASCLC),
with large sample survey on Japanese labors: the 1997 Employment Status Survey (ESS)(1) educational attainments（3） Occupations
ASCLC
ESS
ASCLC
Professors and teachers
wife
junior high school
3.05
9.20
3.90
Public health and medical
6.02
high school
44.53
56.41
workers（%doctors）(5%)
two-year colleges
37.75
24.82
（%nurses）(95%)
four-year universities
14.66
9.56
Social and welfare workers
11.07
5.80
husband junior high school
6.22（%care workers）
48.52
(50%)
high school
39.14（%others）
7.79
(50%)
two-year colleges
12.64
Other professional & technical
32.62
four-year universities
42.01
8.15
workers, and managers
50.49
father junior high school
53.80
Clerical, sales, and service
33.60
high school
27.74
53.68
workers
4.99
two-year colleges
5.21
Others
10.92
22.43
four-year universities
13.26
58.90
mother junior high school
53.51（4) Household's Total Income
35.89
ASCLC
high school
36.25
less than ¥ 1million
3.97
1.18
two-year colleges
8.32¥1mill.-2mill.
1.25
1.73
four-year universities
1.93¥2mill.-3mill.
4.72（2） Employment Status¥3mill.-4mill.
ASCLC
ESS
8.40
¥4mill.-6mill.
25.19
regular workers
26.09
23.21
¥6mill.-8mill.
23.59
self-employed
1.22
5.66
¥8mill.-10mill.
16.72
family workers
5.97
6.19
¥10mill.-15mill.
14.50
part time workers
28.07
23.06
over ¥15mill.
3.96
non working
38.65
41.88

ESS
2.47
6.09
----1.84----4.15
55.63
29.82
ESS
1.47
4.99
9.93
13.83
27.04
20.14
11.24
9.06
2.31

Notes. 1) The Employment Status Survey of 1997 was conducted by the Statistics Bureau of Japan.
2) The number of observation in the ASCLC is 1476 wives, 1464 husbands, 2642 fathers and 2654 mothers. The comparisongroups in the Employment Status Survey are 17 million wives under the age of 50, 15 million husbands under 50, 8 million men
over 60, and 10 million women over 60. Household's income in the Employment Status Survey concerns about 28 million families
whose head is under the age of 50.

35