Household Transfer to Family in Indonesia: The Parental Role Model

Abstract

In this paper, we study the impact of parental transfer on the behavior of their next generation’s transfer using corrected data from Indonesian Family Life Surveys (household size), and an inter generations pairing method based on the demonstration effect theory. Our findings support the existence of parental role models, particularly transfers given to family members living outside households (parents, siblings or children). Specifically, the transfer decision of adults living independently from their origin household is positively affected by their membership in the origin household. This parental role model exists after controlling endogeneity problems contained in the role model estimation framework. This finding empirically confirms the vital role of parents in preserving altruism in society.