Motivation of Parent–Child Co‐residence Behavior: Evidence from the China Health and Retirement Longitudinal Study

• Author: Yijie Wang,Xianghong Wang,Wenkai Sun
• Date: 01 March 2019
• DOI: http://doi.org/10.1111/cwe.12275
• Published date: 01 March 2019

China & World Economy / 66–85, Vol. 27, No. 2, 2019

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©2019 Institute of World Economics and Politics, Chinese Academy of Social Sciences

*Yijie Wang, PhD Candidate, School of Economics, Renmin University of China. Email: wangyijie@ruc.edu.cn;

Wenkai Sun, Professor, School of Economics, Renmin University of China. Email: sunwk@ruc.edu.cn;

Xianghong Wang (corresponding author), Professor, School of Economics, Renmin University of China.

Email: shwang06@ruc.edu.cn; This study was supported by Fundamental Research Funds for the Central

Universities and Research Funds of Renmin University of China (No. 17XNL008).

Motivation of Parent−Child Co-residence Behavior:

Evidence from the China Health and

Retirement Longitudinal Study

Yijie Wang, Wenkai Sun, Xianghong Wang*

Abstract

This paper examines the motivations of parent–child co-residence behavior in China

using data from the China Health and Retirement Longitudinal Study. We test three

possible motives: social norms, self-interest and altruism. We find that social norms

play an important role in household co-residence behavior, showing that the belief that

“sons take care of parents” is strong, and children in different birth orders take different

responsibilities. Taking the one-child policy as a natural experiment, we compared

co-residence behavior between only-child and multi-child families. This allowed us

to test whether children in multi-child families with wealthier parents more often co-

reside in order to compete for a bequest. We nd that parents’ wealth is more appealing

to children in multi-child families. The results support the life cycle theory that co-

residence decisions are motivated by self-interest. We also nd some evidence of altruism

when parents and children make co-residence decisions. These ndings provide some

insights for designing future elder-support policies in China.

Key words: China, lifecycle, one-child policy, parent−child co-residence, social norm

JEL codes: I1, J1, R2

I. Introduction

China’s aging population has received increasing attention from policymakers and

scholars in recent years. According to the National Statistical Bureau (NBS, 2010),

people aged 65 and older accounted for 8.87 percent of the total population. This

number reached 9.7 percent in 2013. As a result, support for the elderly is an increasing

social burden. Elderly parents generally require more help from their child or children

Motivation of Parent−Child Co-residence Behavior 67

©2019 Institute of World Economics and Politics, Chinese Academy of Social Sciences

for daily care.

The unique population structure in China has aggravated the problem of care for

the elderly. Because China applied a one-child policy for many years, children in only-

child families account for a large proportion of the population. According to the Chinese

General Social Survey (CGSS) conducted by the National Survey Research Center at

Renmin University of China, children who are the only child in a family born after 1980

account for 36 percent of the corresponding cohort in 2008. It has been more than

30 years since the implementation of the one-child policy and parents with only one

child are starting to enter retirement age. Without the help of siblings, the only child has

to bear a greater burden when taking care of elderly parents compared to multi-child

families. Traditional Chinese parent−child co-residence is an effective form of family

support for elders and can complement the pension system. However, very few studies

have focused on this issue in China.

Co-residence of parents and children can have many social and economic impacts.

During the past four decades, Chinese family size has declined, with two-person and

three-person families accounting for the largest proportion. The shrinking trend in family

size is attributed to the birth-control policy, migration and economic development. Given

the same population, reduction of household size will increase number of households

and thus boost housing demand and consumption. This trend, however, may slow down

in an aging society because the elderly need to co-reside with their child or children for

daily care.

This paper compares the co-residence behavior of only-child families with multi-

child families to reveal the current elderly support arrangements in China. Our results

can help to explain the past family structure and predict future Chinese family structure.

We examine the motives for co-residence by testing some existing theories. Studies

have examined these motives in other countries (e.g. Bernheim et al., 1985; Chu, 1991;

Sakudo, 2007), but are limited on China.

Our study makes some important contributions. First, the analysis on living

arrangements helps to predict changes in family structure and thereby helps to predict

market demands for resources such as housing. Second, as China’s population is aging,

understanding the current trend of parent–child co-residence in different types of

families is helpful to design an appropriate pension system. If the family co-residence

system can effectively share the burden of supporting the elderly, the future problem of

pension shortage in China may be mitigated. Third, the comparison between only-child

and multi-child families can test theories of co-residence motives, which will provide an

important supplement to the motivation identication issue in the published literature.

The rest of this paper is organized as follows. Section II provides a review of the