Data and sample selection

I use data from the first two consecutive waves of Multiscopo sulle Famiglie, soggetti sociali e condizione dell’infanzia (Multipurpose Survey on Family and Childhood Con- ditions), a survey carried by ISTAT every five years starting from 1998 on the private household population of Italy. The survey sampled around 30,000 households to collect information on household structure, family network, unpaid assistance, important life cycle events and labour market conditions. The total sample size is 108,591 respondents

and the selection procedure is reported in Table 3.2.5

There are no missing values, because ISTAT traditionally provides data where all

values have been imputed using multivariate methods.6 Clearly, this is a drawback

for the analysis, but unfortunately ISTAT does not provide indicators for whether or

not a single variable has been subject to imputation or correction. Only for some

discrete explanatory variables, such as health or retrospective questions, missing values are explicitly allowed to account for cases where the respondent does not want to answer or does not remember. Instead of dropping them, I add the respective category along with the other dummies. The dataset is a stratified sample where strata are defined

by region and dimension of the town/city of residence.7 To guarantee anonymity, the

dataset is released in two versions that cannot be merged: in the first one, the region of residence is provided, but not the dimension of the town; in the other one, the dimension is provided but only broader geographical areas are available. I prefer to use the former

although results do not change if the other dimension is chosen.8

I focus on the household dimension and the consequences of a monetary transfer between generations so I restrict the analysis to married cohabiting couples. To maintain consistency throughout the paper, I refer to the first generation as parents (or in-laws),

on the one hand and donor and recipient income on the other.

5_{I also have the data for the wave 2009 but were no questions about money transfers, which is one}

of the main variable of interest. This is the main reason why I do not consider this wave.

6_{In the original responses there are missing values but they have been recoded by ISTAT.} 7

I do not include sample weights, both because I pool two cross-sections and because I focus on modelling the relationships among different variables. Nevertheless, as Solon et al. (2013) claim, in the case of mis-specification, it is not clear whether unweighted estimates produce a good approximation. Given that this is not guaranteed even when using weights, I follow the quite standard approach of including the stratification variables (area of residence and regions) among the covariates

8

The results are the same if I cluster the standard errors by Italian regions. I use robust option to control for heteroskedasticity in the errors.

the second one as adults both wife and her partner and the third generation as children. Figure 3.1 sketches the intergenarational exchange pattern under this analysis. Par- ents and in-laws may help their adult children through a financial transfer. In turn, adult children may provide elderly care to their parents. In addition, in the presence of offspring, adults may also benefit from their parents’ assistance (grandchildren care).

In this analysis I study all these relationships in place.9

Figure 3.1: Monetary transfer and informal care exchange

In order to correctly identify the adult children, I keep only cases where one of the partners is the reference person of the interview, which are the large majority of the cases (around 98%).

Table 3.2: Sample selection

1998 2003 Total

Obs % Obs % Obs

Original sample 59050 49541 108591

Only married couple 29750 -49.6 24138 -51.3 53888

Only if reference person or partner 29038 -2.4 23574 -2.3 52612

Only one observation per couple (wife) 14519 -50.0 11787 -50.0 26306

Only if both partners aged between 20 and 70 12993 -10.5 9990 -15.2 22983 With at least one parent alive on BOTH sides 7466 -42.5 5247 -47.5 12713

Not cohabiting with parents or in-laws 7143 -4.3 5065 -3.5 12208

Excluding those with parents or in-laws abroad 6966 -2.5 4863 -4.0 11829 Source: Multipurpose Survey on Family and Childhood Conditions Dataset.

Given that I am interested in the exchange of informal care between parents and adult children, I decide to select couples aged between 20 and 70 years old. According to the National Statistical Office, almost 80% of the population under the age of 70 has the mother still alive, while the father is alive in 61.4% of the cases (Battistin et al., 2013). I estimate a number of specifications using different age groups to test the sensitivity of the results in Section 3.5. The information on marriage is collected

with respect to the first wedding in 1998, and to the last one in 2003, and therefore I exclude cases of previous divorce or widowhood. These were still a minority in 1998, and slightly increased in 2003 (Table 3.2). I restrict the sample to couples where there is at least one parent alive, because the main interest lies on the intervivos exchange of family services. I also exclude those cases where the couple cohabits with parents at the time of the interview, because the survey does not allow me to identify elderly care in such cases. This involves only around 4% of the couples. Lastly, I exclude the few cases with parents or in-laws residing abroad, because these are likely to be driven by sensibly different migratory processes. At the end of the selection process I end up with 11,829 observations.

In all the waves, adults are asked whether they provide any help to non-coresident individuals. They then have to specify the most important kind of help they provide, and who receives it, with possible multiple recipients. The question in the Multipurpose Survey on Family and Childhood Conditions states:

In the last four weeks, have you provided free services (medical assistance, adult care, domestic work, company, or paper work) to your parents? Possible answer: Yes or No

Around 85.29% of those who report that their most important help is directed towards their parents say that it consists of informal care. I define the dummy ICP (Informal Care Provided) equal to one for those who report that this help is directed to their parents and that it consists of either medical assistance, adult care, domestic work, company, or paper work. The fact that I observe elderly care only when it is the most important help provided to non-coresident individuals can lead to an underestimation of the total amount of caregivers.

Furthermore, respondents are asked to identify the person who currently entrusts with their child or teenager when she is not with her parents or at school. I define the dummy ICR (Informal Care Received) equal to one for those who report that this task is carried out by their grandparents, without distinguishing the wife’s parents from her in- laws. I select the first category and around 43% of the individuals in the sample report that they receive this kind of help from their parents. The corresponding question is:

are not with their parents or school?

Possible answer: 1. grandparents 2. Uncle/Aunt 3. Brothers/sisters 4. Other relatives 5. Friends 6. Baby-sitter.

Individuals are also asked about the distance between their residence and that of their parents at the time of the interview. The distance should have a strong impact on the informal care provision because it may induce the exchange. The information is reported as a categorical variable: cohabiting; in another flat in the same building; in the same town, within 1 km; in the same town, more than 1 km away; in another town, within 16 kms; in another town between 16 and 50 kms away; more than 50 kms away. I define the variable DIST (distance to parents or in-laws) as the minimum distance from either the mother or the father, in case they live apart. This is available for both

adults.10

The main explanatory variable, Parents’ transfer, is a dummy for monetary help received during a period of economic hardship and difficulties. This covariate is equal to one for those who report that they received monetary help from parents (or in-laws), and to zero otherwise. Around 11% of sample reports that they have received a transfer

from the family of origin. The statement in the questionnaire is:11

During your life, starting from the time you moved out of your parents’ house, have you ever been in financial difficulties?

Possible answer: Yes or No

As briefly described in the Introduction, I address the endogeneity issue, coming from potential family taste between generations, using the job variability of parents and in- laws when the adult child was 14 years old. The ideal instruments should be correlated with Parents’ transfer and they should not directly impact the informal care later on in life. In this context, the set of instruments can be considered as a proxy for the wealth of the family of origin and, once I control for all the other possible covariates which may influence the transmission mechanism, I use the variation across families as a source of shock in wealth. Among the most relevant variables which may influence the likelihood of receveing the transfer, I include a large set of socio-demographic controls such as

10_{In the cases where parents or in-laws live apart, this is defined as the distance from either the}

mother or the father, whichever is the smallest. This information is available for both adults.

number of siblings, number of children, job position, etc. Despite the absence of direct information on income and wealth, I have information on education, employment status and sources of income of the individuals at the time of interview (1998 and 2003), which are good proxies for them. Moreover, I control for parents’ characteristics such as age,

health condition and education.12 In Panel A of Table D.2, I show the statistics on the

parents’ occupation during the childhood of their offspring. In Panel B I do the same exercise for the parents in-law. The most common occupation is blue collar employee (44%) and housework (65%) for both parents’ side.