Review of Income and Wealth Series 43.Number 4,December 1997 PRIVATE INTERHOUSEHOLD TRANSFERS OF MONEY AND TIME: NEW EMPIRICAL EVIDENCE BY ROBERT F.SCHOENI RAND There is a growing awareness that it is important to understand patterns of family assistance;however, there is still a great deal of information about private transfers that is not known.This study begins to fill this void by presenting results from a new survey and integrating these findings with evidence from recent studies that use other new data sets.It is found that:(i)a large share of households participate in private transfer networks.(ii)a greater amount of financial assistance is provided to lower income family members,(iii)altruism does not fully explain transfer behavior,and (iv)people in their 20s and 30s receive more assistance than people of other ages,even the very old. Within the family workers are born,goods are produced,tastes are formed, decisions to work are made,and resources are redistributed.This paper investi- gates the last of these roles,that is,the transfer of resources (i.e.,money and time help)among family members and friends.Understanding private transfers is important for a number of reasons.First,they provide a means through which individuals can transmit their well-being to others.Second,private transfers have potential consequences for the effectiveness of government redistribution policies (Barro,1974;Becker,1974;Roberts,1984;Andreoni,1988;Bernheim and Bagwell,1988;Laitner,1988;Bergstrom,1989;Andreoni,1989;Bruce and Wald- man,1990;Kotlikoff et al.,1990;Altonji et al.,1994).For example,if publicly provided benefits to an individual become more generous,then that individual's family members and friends may respond by decreasing the amount of private assistance they give to the individual.Third,intergenerational flows of resources within the family have been identified as one determinant of fertility (Caldwell, 1976;Willis,1982).The greater the flows of resources from children to parents, the higher will be desired fertility.As flows begin to reverse direction,going from parents to children,fertility will fall. Private transfers may also be one mechanism through which families transmit inequality across generations(Becker and Tomes,1979;Behrman,Pollack,and Taubman,1990;Menchik,1980;and Tomes,1981).Wealthy families may give larger intergenerational assistance,including bequests,leading to persistent inequi- ties.At the same time,families may give conpensatory transfers to their least wealthy members,which would mitigate inequality.Finally,intergenerational Nore:I thank Ted Bergstrom,Paul Courant,Sheldon Danziger,David Lam,Gary Solon,the editor,and two anonymous referees for valuable comments.Financial support was received from the National Institute on Aging (K01-AG00670). Unless otherwise indicated,throughout the paper private transfers will refer to interhousehold transfers of money and time.There is very little data on intrahousehold transfers. 423
Review of Income and Wealth Series 43, Number 4, December 1997 PRIVATE INTERHOUSEHOLD TRANSFERS OF MONEY AND TIME: NEW EMPIRICAL EVIDENCE BY ROBERT F. SCHOENI RAND There is a growing awareness that it is important to understand patterns of family assistance; however, there is still a great deal of information about private transfers that is not known. This study begins to fill this void by presenting results from a new survey and integrating these findings with evidence from recent studies that use other new data sets. It is found that: (i) a large share of households participate in private transfer networks, (ii) a greater amount of financial assistance is provided to lower income family members, (iii) altruism does not fully explain transfer behavior, and (iv) people in their 20s and 30s receive more assistance than people of other ages, even the very old. Within the family workers are born, goods are produced, tastes are formed, decisions to work are made, and resources are redistributed. This paper investigates the last of these roles, that is, the transfer of resources (i.e., money and time help) among family members and friends.' Understanding private transfers is important for a number of reasons. First, they provide a means through which individuals can transmit their well-being to others. Second, private transfers have potential consequences for the effectiveness of government redistribution policies (Barro, 1974; Becker, 1974; Roberts, 1984; Andreoni, 1988 ; Bernheim and Bagwell, 1988 ; Laitner, 1988 ; Bergstrom, 1989 ; Andreoni, 1989 ; Bruce and Waldman, 1990; Kotlikoff et al., 1990; Altonji et a]., 1994). For example, if publicly provided benefits to an individual become more generous, then that individual's family members and friends may respond by decreasing the amount of private assistance they give to the individual. Third, intergenerational flows of resources within the family have been identified as one determinant of fertility (Caldwell, 1976; Willis, 1982). The greater the flows of resources from children to parents, the higher will be desired fertility. As flows begin to reverse direction, going from parents to children, fertility will fall. Private transfers may also be one mechanism through which families transmit inequality across generations (Becker and Tomes, 1979; Behrman, Pollack, and Taubman, 1990; Menchik, 1980; and Tomes, 1981). Wealthy families may give larger intergenerational assistance, including bequests, leading to persistent inequities. At the same time, families may give conpensatory transfers to their least wealthy members, which would mitigate inequality. Finally, intergenerational Note: I thank Ted Bergstrom, Paul Courant, Sheldon Danziger, David Lam, Gary Solon, the editor, and two anonymous referees for valuable comments. Financial support was received from the National Institute on Aging (K01-AG00670). 'unless otherwise indicated, throughout the paper private transfers will refer to ittterhousehold transfers of money and time. There is very little data on intrahousehold transfers
transfers are important because of the role they may play in determining savings and in the accumulation of wealth (Modigliani,1988;Kotlikoff,1988).The Life Cycle Model of Savings claims that savings are accumulated primarily for retire- ment,not for intergenerational transfers,and the proportion of wealth due to private transfers has been empirically analyzed,with a wide range of estimates being identified.2 Despite the fact that there are a number of reasons for studying private transfers,historically there has been little reliable empirical information on this behavior,at least in the U.S.Indeed,the most basic information such as the frequency and size of private transfers has not been well established.This has changed in the past 5-10 years,with several new surveys providing information on private transfers from nationally representative samples.The objective of this paper is to integrate empirical findings from this new and burgeoning literature and provide additional estimates from one data set,the 1988 Panel Study of Income Dynamics,which arguably has the highest quality information on transfers among all nationally representative data sets in the U.S. The paper begins with a discussion of the behavioral models that have been posited to explain private transfers.This section is followed by a summary of findings from previous empirical analyses.The subsequent sections describe the 1988 Panel Study of Income Dynamics and the empirical results based on these data.A concluding section synthesizes the new results and the earlier findings in an attempt to establish a group of"stylized facts"regarding private interhousehold transfers. 1.BEHAVIORAL MODELS OF TRANSFERS Several models of transfer behavior have been posed,including altruism, exchange,"warm glow,"and insurance.The altruism model (Becker,1974;Barro, 1974)states,in terms of parent-child relations,that the parent's well-being is directly related to the well-being of her child (i.e.,U=U(Y,U),where Y are goods consumed by the parent and U.is the utility of the child).The model predicts that parents will decrease the amount of assistance provided to their children in response to increases in the children's income.Altruism also implies that if parents are initially transferring some positive amount to a child,and the parent's income increases by SI while the child's income decreases by $l,then the parent will transfer an additional dollar to the child.In this framework,the coefficient on the parent's income less the coefficient on the child's income should sum to one (Cox and Rank,1992;Altonji et al.,1994). The altruism model has been extended by Andreoni (1989)to include simul- taneous"warm glow"giving.That is,parents not only care about the well-being of their children,they care about the amount of gifts they give their children. Moreover,if the behavior is only motivated by warm glow,then the amount of the transfer given to the child is independent of the characteristics of the child. A third model,exchange,has been the most widely analyzed alternative to altruism 'Kotlikoff and Summers'(1981)estimates are 45-80 percent,while other estimates are Iss than 25 percent 424
transfers are important because of the role they may play in determining savings and in the accumulation of wealth (Modigliani, 1988; Kotlikoff, 1988). The Life Cycle Model of Savings claims that savings are accumulated primarily for retirement, not for intergenerational transfers, and the proportion of wealth due to private transfers has been empirically analyzed, with a wide range of estimates being identified.2 Despite the fact that there are a number of reasons for studying private transfers, historically there has been little reliable empirical information on this behavior, at least in the U.S. Indeed, the most basic information such as the frequency and size of private transfers has not been well established. This has changed in the past 5-10 years, with several new surveys providing information on private transfers from nationally representative samples. The objective of this paper is to integrate empirical findings from this new and burgeoning literature and provide additional estimates from one data set, the 1988 Panel Study of Income Dynamics, which arguably has the highest quality information on transfers among all nationally representative data sets in the U.S. The paper begins with a discussion of the behavioral models that have been posited to explain private transfers. This section is followed by a summary of findings from previous empirical analyses. The subsequent sections describe the 1988 Panel Study of Income Dynamics and the empirical results based on these data. A concluding section synthesizes the new results and the earlier findings in an attempt to establish a group of "stylized facts" regarding private interhousehold transfers. Several models of transfer behavior have been posed, including altruism, exchange, "warm glow," and insurance. The altruism model (Becker, 1974; Barro, 1974) states, in terms of parent-child relations, that the parent's well-being is directly related to the well-being of her child (i.e., U,>= U,(X,, U,), where X, are goods consumed by the parent and U, is the utility of the child). The model predicts that parents will decrease the amount of assistance provided to their children in response to increases in the children's income. Altruism also implies that if parents are initially transferring some positive amount to a child, and the parent's income increases by $1 while the child's income decreases by $1, then the parent will transfer an additional dollar to the child. In this framework, the coefficient on the parent's income less the coefficient on the child's income should sum to one (Cox and Rank, 1992; Altonji et al., 1994). The altruism model has been extended by Andreoni (1989) to include simultaneous "warm glow" giving. That is, parents not only care about the well-being of their children, they care about the amount of gifts they give their children. Moreover, if the behavior is only motivated by warm glow, then the amount of the transfer given to the child is independent of the characteristics of the child. A third model, exchange, has been the most widely analyzed alternative to altruism '~othkoff and Summers' (1981) estimates are 45-80 percent, while other estimates are Iss than 25 percent
(Cox,1987;Bernheim et al.,1985;Cox and Rank,1992;Cox and Jakubson, 1995).The basic presumption is that,using the parent-child notation again, children provide something to their parents,such as assistance in old age,a sympa- thetic ear,or contemporaneous help in household production,and in return par- ents give their children cash.The parent-child relationship can be viewed as a market transaction where the parent demands services,which perhaps only the child can provide or for which there are no close market substitutes,and the child provides services in return for remuneration.As a result,the relationship between the income of the children and the amount of assistance they receive from their parents is a function of the elasticities of supply and demand for the services provided by the child,and it could be either positive,negative,or zero (Cox, 1987).In sum,one test of these models is to examine the effects of child's income on the amount of transfers they receive,with altruism predicting a negative effect, (strict)"warm glow"predicting no effect,and the exchange model being consistent with any relationship." Transfers may also be used to smooth consumption across time and to over- come liquidity constraints (Kotlikoff and Spivak,1981;Cox,1990;Cox and Jappelli,1990).The family may provide insurance during periods of unemploy- ment or low income,and parents may assist their liquidity constrained children with purchasing a home or financing their schooling.Each of these factors is addressed in the empirical analyses. Although these models have been discussed in terms of income,in general, anything that effects the well-being of the child or parent may alter transfers. Examples of these factors include health status and the existence of grandchildren within an adult child's household.If the adult child has children of their own. and their parent cares about these grandchildren,then the amount of assistance would be altered (i.e.,increased under altruism).Or if a family member is in poor health,which in turn lowers their well-being,then altruistically motivated family members would increase the amount of assistance they give to the person in poor health. The approach in this paper is to investigate the empirical support for these various models.To this end,these models provide a conceptual framework for the empirical specification.The general specification which subsumes each of these models is one in which indicators of the well-being of the potential donor (e.g., parent)and the well-being of the potential recipient (e.g.,adult child)are included. In addition,the exchange model implies that the time value of potential providers of services (i.e.,children)may also be important.The models that we estimate will incorporate various measures of well-being,including income and health, allowing us to discriminate among some of the models. II.PREVIOUS STUDIES Frequency and Magnitude of Private Interhousehold Transfers Table I summarizes the evidence on the frequency and magnitude of inter vivos financial transfers reported in studies that have examined nationally One weakness of the exchange model is that its prediction of the effect of income on transfers cannot be refuted. 425
(Cox, 1987; Bernheim et ul., 1985; Cox and Rank, 1992; Cox and Jakubson, 1995). The basic presumption is that, using the parent-child notation again, children provide something to their parents, such as assistance in old age, a sympathetic ear, or contemporaneous help in household production, and in return parents give their children cash. The parent-child relationship can be viewed as a market transaction where the parent demands services, which perhaps only the child can provide or for which there are no close market substitutes, and the child provides services in return for remuneration. As a result, the relationship between the income of the children and the amount of assistance they receive from their parents is a function of the elasticities of supply and demand for the services provided by the child, and it could be either positive, negative, or zero (Cox, 1987). In sum, one test of these models is to examine the effects of child's income on the amount of transfers they receive, with altruism predicting a negative effect, (strict) "warm glow" predicting no effect, and the exchange model being consistent with any re~ationship.~ Transfers may also be used to smooth consumption across time and to overcome liquidity constraints (Kotlikoff and Spivak, 1981; Cox, 1990; Cox and Jappelli, 1990). The family may provide insurance during periods of unemployment or low income, and parents may assist their liquidity constrained children with purchasing a home or financing their schooling. Each of these factors is addressed in the empirical analyses. Although these models have been discussed in terms of income, in general, anything that effects the well-being of the child or parent may alter transfers. Examples of these factors include health status and the existence of grandchildren within an adult child's household. If the adult child has children of their own, and their parent cares about these grandchildren, then the amount of assistance would be altered (i.e., increased under altruism). Or if a family member is in poor health, which in turn lowers their well-being, then altruistically motivated family members would increase the amount of assistance they give to the person in poor health. The approach in this paper is to investigate the empirical support for these various models. To this end, these models provide a conceptual framework for the empirical specification. The general specification which subsumes each of these models is one in which indicators of the well-being of the potential donor (e.g., parent) and the well-being of the potential recipient (e.g., adult child) are included. In addition, the exchange model implies that the time value of potential providers of services (i.e., children) may also be important. The models that we estimate will incorporate various measures of well-being, including income and health, allowing us to discriminate among some of the models. Frequency and Magnitude of Private Interhousehold Trun~fers Table 1 summarizes the evidence on the frequency and magnitude of inter vivos financial transfers reported in studies that have examined nationally 'one weakness of the exchange model is that its prediction of the effect of income on transfers cannot be refuted. 425
representative samples of individuals or households.Despite differences in survey design,some common patterns emerge.'Approximately 8 to 20 percent of house- holds receive financial assistance in a given year,while a slightly higher share of households report giving financial help.Among all households,not just those receiving assistance,the average amount of help received annually is $300 to $500 [expressed in 1987 dollars,which is the year of the transfer supplement to the Panel Study of Income Dynamics (PSID)].Moreover,the distribution of mone- tary transfers is highly skewed (Rosenzweig and Wolpin,1990;Cox and Raines, 1985;Gale and Scholz,1991) TABLE I FINDINGS FROM PREVIOUS STUDIES Reporting Mean Amount Received Period for Share Receiving (Given)Conditional on Authors Data Transfers (Giving) Positive Transfer* Moon (1983) 1978 Panel Study of Past Year 8.4%(98%) s3.753($2.977) Income Dynamics Cox and 1979 President's Past Year 12.3%(15.8% 53.144(S3,256) Raines (1985) Commission on Pension Policy Morgan (1985) 1980 Panel Study of Past Five 22.0%(29.0%0 NR Income Dynamics Years MacDonald 1988 National Survey of Past Five 16.8%(19.5%)Gifts s5,592(S7.081)Gifts (1990) Families and Years 11.5%(19.4%)L0ans s6,334(S6,157)L0ans Households 2.8%Home Assist. S11.381 (NR)Home Assist. Gale and 1983 86 Survey of Past Three 5.3%9.4%) sf6.247(17.714) Scholz (1991) Consumer Finances Years Cox and 1987/88 National Past Five 25% S6.46I Rank(1992) Survey of Families Years and Households Altonji et al. 1988 Panel Study of Past Year 19.49% $1.459 (1996) Income Dynamics Nores:*Expressed in 1987 dollars and excluding bequests.~Includes only transfers of at least S3.000 over the three year period.NR-not reported.Morgan's estimates are for"emergency help,"and Altonji eal.'s estimates are for transfers from parents to children. An alternative form of transfer is bequests,and in Cox and Raines'(1985) data bequests are received by just 0.8 percent of the respondents in the single year,and they account for 25 percent of the total amount of transfer dollars received.MacDonald (1990)reports similar magnitudes with the NSFH;bequests are received by 1.4 percent of the respondents over the five year period,and they account for 19.2 percent of the total amount of private transfers received. 'Analyses using the National Longitudinal Survey.Health and Retirement Survey,and Asset and Health Dynamics Survey are not included in Table I because these data are not representative of all ag℃s. For example,the analyses reported by Gale and Scholz using the Survey of Consumer Finances is restricted to transfers of at least S3,000 over the previous three years.Moreover,while the National Survey of Families and Households collects information on transfers made in the previous five years. most other studies collect information on transfers in the previous one year. "The average amount of assistance received from all three types of transfers in the National Survey of Families and Houscholds is S1.986 over the five year period,which,if annualized by dividing by five.is $397. 426
representative samples of individuals or housel~olds.~ Despite differences in survey design, some common patterns emerge.5 Approximately 8 to 20 percent of households receive financial assistance in a given year, while a slightly higher share of households report giving financial help. Among all households, not just those receiving assistance, the average amount of help received annually is $300 to $500 [expressed in 1987 dollars, which is the year of the transfer supplen~ent to the Panel Study of Income Dynamics (PSID)].~ Moreover, the distribution of monetary transfers is highly skewed (Rosenzweig and Wolpin, 1990; Cox and Raines, 1985; Gale and Scholz, 1991). TABLE 1 Authors Data Reporting Mean Amount Received Period for Share Receiving (Given) Conditional on Transfers (Giving) Positive Transfer* Moon (1983) 1978 Panel Study of Past Year 8.4% (9 8%) $3,753 ($2,977) Income Dynam~cs Cox and 1979 President's Past Year 12.3% (15.8%) $3,144 ($3,256) Raines (1985) Commission on Pension Policy Morgan (1985)A 1980 Panel Study of Past Five 22.0% (29.0%) NR Income Dynamics Years MacDonald 1988 National Survey of Past Five 16.8% (19.5'%) Gifts $5,592 ($7,081) Gifts (1990) Families and Years 11.5'%, (19.4%) Loans $6,334 ($6,157) Loans Households 2.8% Home Assist. $1 1,381 (NR) Home Assist. Gale and 1983 86 Survey of Past Three -5.3%(9.4%) -$16,247 ($17,714) Scholz (1991) Consumer Finances Years Cox and 1987/88 National Past Five 25.9% $6,46 1 Rank (1992) Survey of Families Years and Households Altonji el 01. 1988 Panel Study of Past Year 19.4% $1,459 (1996)A Income Dynamics Notes: *Expressed in 1987 dollars and excluding bequests. -Includes only transfers of at least $3,000 over the three year period. NR =not reported. organ's estimates are for "emergency help," and Altonji et al.'s estimates are for transfers from parents to children. An alternative form of transfer is bequests, and in Cox and Raines' (1985) data bequests are received by just 0.8 percent of the respondents in the single year, and they account for 25 percent of the total amount of transfer dollars received. MacDonald (1990) reports similar magnitudes with the NSFH; bequests are received by 1.4 percent of the respondents over the five year period, and they account for 19.2 percent of the total amount of private transfers received. 4Analyses using the National Longitudinal Survey, Health and Retirement Survey, and Asset and Health Dynamics Survey are not included in Table 1 because these data are not representative of all ages. 5~or example, the analyses reported by Gale and Scholz using the Survey of Consumer Finances is restricted to transfers of at least $3,000 over the previous three years. Moreover, while the National Survey of Families and Households collects information on transfers made in the previous five years, most other studies collect information on transfers in the previous one year. he average amount of assistance received from all three types of transfers in the National Survey of Families and Households is $1,986 over the five year period, which, if annualized by dividing by five, is $397
Multivariate Models The direction of the relationship between recipient's income and the amount of money received has been identified as a test of the altruism model,with the altruism model predicting that as the income of a recipient increases,ceteris par- ibus,the amount of private transfers received will decrease (Becker,1981).Cox (1987)and Cox and Rank(1992)analyzed this relationship empirically and find a positive relationship between the amount of assistance received and the(potential) recipient's income.The findings of Cox (1987)and Cox and Rank (1992)are corroborated by those of MacDonald (1990).3.8 However,other studies found a negative relationship between the amount (or probability)of transfers received and income.Rosenzweig and Wolpin's(1990) point estimates imply that a $5,000 increase in the adult child's earnings reduces the probability of co-residing by 11.1 percent and reduces the probability of receiving a monetary transfer while not residing at home by 10.9 percent.In a recent paper using the 1988 PSID,Altonji et al.,(1996)specify a Tobit model and find that the respondent's income has a negative effect on the amount of transfers received from parents.Shelton and Sueyoshi(1993),using information on private transfers collected annually in the PSID,finding that having the lowest household income among the households in the family increases the probability of receiving private transfers from 11 percent to 20 percent.Work by McGarry and Schoeni (1995,1996)using the Health and Retirement Survey and the Asset and Health Dynamics Survey finds that larger financial transfers are given to adult children with lower income,and this result holds when they look within families by controlling for family fixed effects.Using the Asset and Health Dynam- ics Survey,Dunn and Phillips(1995)also find that inter vivos transfers are more likely to be given to poorer children within a family,but that children of different income levels are equally likely to receive parental transfers at the time of the death of a parent. Most studies have found that individuals with more years of schooling both give and receive greater amounts of money transfers (McDonald,1990;Cox and Raines,1985).However,McGarry and Schoeni (1995,1996)demonstrate that the effects of schooling are mitigated substantially when family fixed effects are controlled for by examining differences in transfers among siblings.This pattern is consistent with the hypothesis that parents who make larger transfers to their children are also parents who invest more in their children's education. A popular belief about black families is that they have a more active support network than white families.However,with regard to interhousehold assistance, most recent studies have not found support for this belief(MacDonald,1990; Silverstein and Waite,1992).For example,MacDonald (1990)shows that,among MacDonald(1990)uses a two-step estimation procedure,in which he excludes life-course events (divorce,marriage,births,home-leaving,non-work and non-school spells)from the Probit model. Furthermore,he estimates a Tobit regression as an alternative to the two-step procedure and does not find consistently positive effects of recipient's income. "In Cox's(1987)analyses of the PCPP,only characteristics of the respondent are available.Using the NSFH,Cox and Rank (1992)are able to control for parent's income.Both studies use a two- step estimation procedure. 427
Multivariate Models The direction of the relationship between recipient's income and the amount of money received has been identified as a test of the altruism model, with the altruism model predicting that as the income of a recipient increases, ceteris puribus, the amount of private transfers received will decrease (Becker, 1981). Cox (1987) and Cox and Rank (1992) analyzed this relationship empirically and find a positive relationship between the amount of assistance received and the (potential) recipient's income. The findings of Cox (1987) and Cox and Rank (1992) are corroborated by those of MacDonald (1990).~,' However, other studies found a negative relationship between the amount (or probability) of transfers received and income. Rosenzweig and Wolpin's (1990) point estimates imply that a $5,000 increase in the adult child's earnings reduces the probability of co-residing by 1 1.1 percent and reduces the probability of receiving a monetary transfer while not residing at home by 10.9 percent. In a recent paper using the 1988 PSID, Altonji et al., (1996) specify a Tobit model and find that the respondent's income has a negative effect on the amount of transfers received from parents. Shelton and Sueyoshi (1993), using information on private transfers collected annually in the PSID, finding that having the lowest household income among the households in the family increases the probability of receiving private transfers from 11 percent to 20 percent. Work by McGarry and Schoeni (1995, 1996) using the Health and Retirement Survey and the Asset and Health Dynamics Survey finds that larger financial transfers are given to adult children with lower income, and this result holds when they look within families by controlling for family fixed effects. Using the Asset and Health Dynamics Survey, Dunn and Phillips (1995) also find that inter vivos transfers are more likely to be given to poorer children within a family, but that children of different income levels are equally likely to receive parental transfers at the time of the death of a parent. Most studies have found that individuals with more years of schooling both give and receive greater amounts of money transfers (McDonald, 1990; Cox and Raines, 1985). However, McGarry and Schoeni (1995, 1996) demonstrate that the effects of schooling are mitigated substantially when family fixed effects are controlled for by examining differences in transfers among siblings. This pattern is consistent with the hypothesis that parents who make larger transfers to their children are also parents who invest more in their children's education. A popular belief about black families is that they have a more active support network than white families. However, with regard to interhousehold assistance, most recent studies have not found support for this belief (MacDonald, 1990; Silverstein and Waite, 1992). For example, MacDonald (1990) shows that, among '~ac~onald (1990) uses a two-step estimation procedure, in which he excludes life-course events (divorce, marriage, births, home-leaving, non-work and non-school spells) fiom the Probit model. Furthermore, he estimates a Tobit regression as an alternative to the two-step procedure and does not find consistently positive effects of recipient's income. '1n Cox's (1987) analyses of the PCPP, only characteristics of the respondent are available. Using the NSFH, Cox and Rank (1992) are able to control for parent's income. Both studies use a twostep estimation procedure