Extended Families and Child Development: Evidence from Indonesia

Daniel R. LaFave, Duke University
Duncan Thomas, Duke University

How intergenerational transfers affect child wellbeing is poorly understood. We provide empirical evidence on whether and how grandparent resources affect child health and education using uniquely rich longitudinal survey data from the Indonesia Family Life Survey. IFLS contains information on resources under the control of each individual within households, and resources of individual family members who are not co-resident. Contrasting the impact on child outcomes of parental resources, grandparent resources and resources of other family members, we provide direct evidence on the role that intergenerational transfers play in human capital accumulation. Estimates are placed in the context of a theoretical model of family resource allocation that imposes few restrictions on preferences of individuals within a family. We thereby assess whether co-resident and non co-resident family members make allocation decisions cooperatively, and can identify departures from efficiency in resource allocation. The results are important for understanding family behavior and intergenerational exchanges.