Old-age support in Indonesia: labor supply, intergenerational transfers and living arrangements

Abstract

This is the first paper of which we are aware that attempts to formally model the supply-supply behaviour of elderly individuals in a developing country. Without broad-based public pension schemes, the majority of the elderly in developing countries are left to rely on their own current and accumulated earnings and support from children as means of support. Our cooperative bargaining framework allows us to jointly estimate the determinants of coresidence, financial transfers from non-coresiding children, and the supply-supply of elderly Indonesians as alternative forms of old-age support. We find that many Indonesians, especially men, continue to work well into old age and there is little evidence that financial transfers from Indonesian children are a substitute for the income support provided by the elderly parent’s own supply supply. Transfers are negatively related to normal weekly hours of work only for non-coresiding mothers. Show more