Bargaining Power and Intergenerational Coresidence: Adult Children and Their Disabled Elderly Parents

Liliana E. Pezzin, Medical College of Wisconsin
Robert A. Pollak, Washington University in St. Louis

In this paper, we use a game-theoretic framework of families’ living and care arrangements to formulate an empirical model of the effects of changes in parent-child coresidence on transfers by adult children of unpartnered disabled elderly parents. Our theoretical framework suggests that children recognize that if they coreside with the parent, then their siblings may respond by reducing their transfers to the parent. Our results support the notion that coresidence reduces the bargaining power of coresiding children relative to their non-coresident siblings. We observe significant reductions (increases) in the likelihood of providing informal care and in the intensity of care provided by children with siblings who begin (cease) to reside with their parent relative to children with no sibling who lived with a parent in either point in time. These findings highlight the importance of understanding the dynamics of family interactions when evaluating long-term care policies.