Trends and Transitions in old age support in Taiwan
Alfred Ko-wei Hu
Center for Survey Research, Academia Sinica
Tsung-Chi Cheng
Department of Statistics, National Cheng-chi University
First Draft
Paper presented in the Conference of Panel Studies of Family Dynamics in
Taiwan, Dec 2-3, 2005.
Like most societies in East Asia, the financial support from adult children to their
elderly parents has been a practice critically acclaimed in Taiwan. It helps the
elderly parents to face the forthcoming life cycle with less uncertainty and thus serves
an important part of their well-being (Lee, Parish et al. 1994; Lilliard and Willis 1997;
Frankenberg 2002). Such a pattern of family assistance for the elderly, however, is
in doubt nowadays. As a result of shrinking in the size of the household and
weakening ties to kin outside of household during economic development, there are
growing concerns that the traditional safety valve built by the family in old age
support may be dysfunctional. While state programs and market resources such as
pensions, health care, and private insurance programs can provide a supplement or
substitute for family support, unlike these institutions in developed countries, these
extra-familial sources are limited and are still in the early stage of implementation at
the time when Taiwan populations are ageing rapidly.
Concentrating on intergenerational financial support of adult children for their
parents in Taiwan, this study is motivated in large part by question of how the elderly
parents is supported financially by their adult children in the face of the declining
fertility rates and longer life expectancies that characterized population ageing. We
use Taiwan at the beginning period of implementing social welfare schemes as a case
to examine several theoretical models on intergenerational transfers.
Taiwan provides excellent setting for the study of intergenerational transfers for
the following reasons. First, there is a strong adherence to norms of filial piety and
family continuity through the male line. The family in the eyes of its cultural
tradition is viewed as the primary provider of social security and care for the elderly.
Studies conducted over the past decades in one way or the other seem to confirm to
one observation that financial transfers from adult children still comprise the main
source of income for the majority of the elderly in Taiwan. Secondly, demographic
change in Taiwan has been drastic over the past decades and has led to the increase in
the relative size of the older population and decreases in the availability of children
with whom to exchange resources. Fertility begun to fall in the late 1950s and since
the mid-1980s, it has consistently remained below replacement level with an average
of 1.8 children born per woman. On the other hand, the increasingly ageing
population has been phenomenal in Taiwan. As of 2003, the proportion of the
population aged 60 and older was about 10 percent. It is expected to rise to
approximately 25 percent of the population by 2025, almost the same level expected
in most advanced industrialized nations.
Thirdly, while Taiwan has achieved rapid
economic development over the past decades, the pace of economic growth has been
significantly slowing down since the late 1990s and its growth rate has once hit below
zero in the wake of East Asian economic crisis. At last, universal health insurance
has been provided in Taiwan since the mid-1990s. Nowadays, it is fair to say that
while this program, along with other public social security programs, is still in the
early stage, the availability of such resources is growing.
In the early 1990s, a study conducted by Lee, Parish, and Willis thoroughly
reviewed the patterns of intergenerational support in Taiwan (1994). While the
authors conclude that the traditional patterns of supporting system remained strong at
the time when the research was conducted, they point out the ways open for change in
the future: “With rapid economic growth, adult children have typically been more
prosperous than their parents, with very few public social welfare benefits there have
been few sources of old age support other than adult children (1994: p1034).” Ten
years after, the situation is different: with the implementation of society-wide security
programs and the decrease in economic growth, what are the conclusions about old
age support that we can draw from this new setting in Taiwan?
Motivations for transfer within families
The literature on intergenerational transfer in developing countries has been
studied extensive in which a number of models have been advanced concerning the
financial transfers from adult children to their parents. The main motives that have
been invoked to explain transfer behavior are: (1) insurance mechanisms of saving for
old age; (2) the power and bargaining between elderly parents and their children; (3)
voluntary quid-pro-quo exchanges of service between parents and children; (4)
repayment to parents to their earlier investment in the child; and (5) altruism amongst
family members.
The Old Age Security Hypothesis
The old age security hypothesis emphasizes the problems that individuals face in
finding a reliable outlet for saving for old age in developing societies. In the early
stage of development, financial institutions are primitive, property rights are insecure,
and government social security schemes, private pension, and health insurance are
nonexistent in this context, more children in the household would then be seen as an
investment for the provision of security in a number of forms, including monetary
transfers, help with housework, and care if the parent is frail or ill. As economic
development takes place, markets emerge, and society develops more sophisticated
financial institutions, the old age security hypothesis suggests that parents would
increasingly rely on the saving mechanisms from market, but less on old age transfers
from their children, and the economic values of having more children in the
household will gradually decline. One hypothesis can be generated from this view:
Hypothesis 1: Since Taiwan has undergone the early stage of economic
development, family size of at children level will be less likely to affect the possibility
for parents to receive financial support.
The Power and Bargaining Model
An alternative view on intergenerational transfers is from the perspective of
power and bargaining status between elderly parents and their children. While the
power and bargaining view generally agrees that having children is less profitable or
more costly during economic development, the sources of such a change in attitude of
having more children in household have less to do with saving consideration, but
more to do with the fact that, with declining economic status during economic
development, most parents tend to lose their power to extract obedience and resources
from children. The transfers from adult children to parents can be found only from
those parents who have more resources, and power as well, to elicit children’s
attention and support (Bernheim, Schleifer, and Summer 1985). Other than the
resources owned by parents, household economies of children’s families are
considered in this perspective. In this view, when husband and wife have more
resources, they may use their financial resources to exempt themselves from
coresiding with parents. Two hypotheses are developed from older parents’ and
children’s perspectives, respectively:
Hypothesis 2: The elderly with more economic resources are more likely to
receive the support from their children.
Hypothesis 3: A child with relatively higher family income or wife having a job
is more likely to provide monetary support to elderly parents.
The Mutual Aid Model
The third theoretical model to be studied is the mutual aid model, focusing on the
financial assistance among family members, involving voluntary quid-pro-quo
exchanges of service between parents and children. According to the type of
assistance provided among family members, mutual aid can be divided into short and
long term exchange. In the short term, aid may include help with various kind of
housework and the sharing of goods with substantial scale economies. A long term
view of mutual aid puts emphasis on the role of family members in providing implicit
insurance and loan principles used to reduce income risks of between parents’ and
children’s family. While long-term aspect of family assistance may be more crucial
in the Taiwan context, the focus of the present discussion is limited to short term
exchange and the hypothesis developed here is:
Hypothesis 4: Children are more likely to provide financial support, when
parents have health problems or when parents are able to run errand for children’s
family.
Parental Repayment and Altruistic Hypothesis
In the parental repayment hypothesis, the emphasis is on borrowing rather than
saving constraints. Old age support for parents is seen as repayment of loans and
grants that their children received in the previous period. Based mainly on Becker’s
human capital theory, this perspective assumes that there is an implicit family capital
market in which parents finance human capital investment in their children and old
age support made by children is seen as repaying the loans component (Becker and
Tomes 1976). According to this model, we may have the following hypothesis:
Hypothesis 5: Individuals who received more early investment (e.g., more
education) within the family network are more likely to provide old age support for
their parents.
While the parental repayment hypothesis assumes the existence of an implicit
arrangement functioning to enforce children to repay their parents’ investment, the
altruism hypothesis peers inside this “black box” by treating family as a closely
related network that cares for the well-being of all family members and seeks optimal
distribution of resources within the family network. An altruistic head of the
household will transfer resources to other family members so as to maximize utility
functions of all family members. Developed from the Becker-Tomes (1976) model,
the altruistic model proposes that supporting elderly parents financially becomes part
of optimal distribution of wealth in the family: the more altruistic the household head,
the more likely he will provide support for old aged parents. In
Hypothesis 6: Children whose families are in a better economic condition are
more likely to provide monetary transfers to their parents.
Hypothesis 7: Distance of residence would not sever transfers from adult
children to parents. For those children who live father are more likely to provide
monetary help, regardless whether parents run errands for their families or not.
Hypothesis 8: A more altruistic individual is more likely to continue to provide
monetary support for their parents.
Gender
According to the Chinese patrilineal norms, there are difference in the
obligations toward parents between sons and daughters.
For instance, the rights to
a woman’s labor and reproduction were transferred to the husband’s family at
marriage. This also means the end of daughter’s formal obligations toward parents,
even if they gave a lot before marriage (Greenhalgh 1985). The link between
daughters and parents, nevertheless, may not be so severe. There are ample
anecdotal evidence from ethnographic studies that daughters will continue to be
important family members after marriage, both materially and emotionally. In this
study, we will differentiate the patterns of support by gender on old age support.
Data
Data from Panel Studies of Family Dynamics in Taiwan between 2001 to 2004
provide an island-wide representative sample of men and women aged 35-65. We
restrict our analysis to currently married men and women, with at least one parent
surviving in 2004. With wives typically younger than their husbands, more wives
have surviving parents, giving 349 observations for the husbands’ sample and 404
observations for the wives’ sample.
Dependent Variables
In Panel Studies of Family Dynamics, questions of mutual support were asked in
2001, 2002 and 2004. In the survey conducted in 2004, after detailed questions on
parents’ current status, each respondent was asked whether there had been monthly
support to and from their parents as well as the amount of the support (upward vs.
downward flow of support). The positive net value of upward transfers minus the
downward transfer provides the central data the analysis below1. In addition, the net
values of monetary support in 2001, 2002, and 2004 are used in latent growth model
to evaluate the initial status and the change of support in association with family
incomes respectively.
Independent variables
In addition to background variables such as age of respondents and parents’
surviving status, there are five sets of variables related to competing models of
intergenerational support. The old age security hypothesis is tested mainly from
number of children. In the power and bargaining model, parents’ socioeconomic
status, its condition in the division of properties and sources of income are used to
measure the power owned by parents to extract financial support from their children.
It is expected that the more parental power, the more likely children will provide
support. With regard to children’s bargaining power, the couple with more income
should provide more resources to parents; particularly, if wife has a job, it is more
likely for them to provide the support in exchange of separate residence.
Health condition of parents and whether parents provide housework help are
variables used to test the mutual aid model.
It is expected that monetary
intergenerational support is more likely to be found when parents had health problem
in previous years, or parents provided help in housework, such as baby sitting, and
other family chores.
The variable of whether respondent has more schooling than other siblings is
used to test both the repayment hypothesis and the altruistic hypothesis, for both
model assume that the more education one received, relative to other sibling, it is
more likely for parents to receive old age support. A thorough test of the altruistic
hypothesis, however, has to take other factors into consideration. Here the income
of child’s family, his/her residential condition, and the condition of parents’ health are
used as variables to evaluate the altruistic hypothesis.
1
Children who are net recipients or nongivers are classified as zero.
Table 1 here
Results
(1) The Initial status and change of support
Figure 1 presents family income to trajectories of elderly support. Without
controlling for other variables, it is found that the initial status between family income
and parental support is positive and significant (0.27), meaning that the more income
one has, the more support for parents. The initial status of providing financial
support for parents, however, is negatively and significantly related to the rates of
change (-0.41), suggesting that, for those who provide more financial support in the
initial period, the amount of change in the following years will be less in comparison
with the amount of change among those who paid less. The above findings, in
association with the finding that family income and its growth rates have little impact
on the amount and growth rates of financial support for parents, implies a primitive
summary of an inelastic pattern of old age support provided by adult children from
2001 to 2004: the period in which Taiwan’s economy for the first time began to slow
down.
Figure 1 here
(2) The Determinant of Intergenerational Transfers
A. Public-Based Social Security Programs and Old Age Support
Taiwan began to introduce a universal health program since the mid-1990s and,
in about the same period, several subsidies programs were initiated to provide income
to special segments of the older populations (Hermalin 2003). While it is still too
early to evaluate the impact of these public-based programs on old age support, figure
2 shows that the redistribution effect is very little with the result that those whose
main sources of income come from employment pension at old age are still in a better
status to earn more support from their children in terms of the amounts received.
Figure 2 here
B. Determinants of support
Table 2 presents the result of logistic and regression analysis by dividing into
males and females. The analysis is first to differentiate the factors affecting whether
old age support is presented , then to distinguish the amount of support.
Generally, Table 2 shows a high level of old age support in Taiwan at the early
stage of introducing society-wide social security programs. Economic recession
during the survey period, 2001-2004, had little impact on the level of support in the
sense that the patterns of support in previous years were strong and in a continuous
fashion. While males are the main caregiver of elderly parents2, female children
continue to play a significant part in taking care of their parents. In addition, the
results here are also consistent with earlier observation that change of family income
has little impact on old age support in both male and female respondents.
Among males and females, the size of siblings has different effects. For males,
having more female siblings can substantially help reduce about one fourth of the
likelihood of providing support for parents, but for females, having more sisters
means the increasing chance of providing support. For both, the effect of having
more brothers is weak and insignificant, suggesting that traditional old age security
hypothesis which would puts more emphasis on the roles played by males in
providing support is not supported in the current analysis.
In Table 2, other factor which inhibit old age support include:
(1) Whether wife has a job would not increase the bargaining status among males
and females. In contrast to the result that more resourceful parents (Parents’
2
The logistic analysis not shown in Table 2 shows that male children are more likely to provide
support than female by 64% higher.
socioeconomic status) are more likely to elicit support from their children, this finding
suggests that even if the power and bargaining model works in Taiwan’s context,
parents tend to achieve strong position in bargaining.
(2) The power and bargaining model may not be an effective model in Taiwan
context is also found in the situation where providing old age support is not affected
by whether parents have properties or not, or whether family properties have been
divided or not. This finding suggests that traditional old age security is problematic
in Taiwan’s context.
There are some supports of the mutual aid model, but mainly with females. For
instance, when she has more children, it is more likely that she can be exempt from
providing parents’ financial support and the amount given can be reduced significantly.
Nevertheless, when the economic situation her married family is improved, the
likelihood of providing support increases significantly by 15 percent, and the increase
in amount given as well. Moreover, she is more likely to provide support and to give
more when her parents are able to provide help in her household work. All of the
above findings imply that there is a clear gender difference with regard to the
generalizability of the mutual aid model.
To certain extent, the role of females in providing old age support is also found
in accordance with the prediction of the altruistic/repayment model, particularly to
those urbane females: as long as they live in urban areas, they have more obligations
to take care of their parents in financial terms than females in rural village. In
contrast, the altruistic/repayment model seems to be a more effective explanation for
males: they are more likely to take care of their parents if they received more
education than other siblings and they are more likely to provide financial support if
parents live with other married siblings.
Conclusion
Based on Taiwan’s Panel Studies of Family Dynamics surveyed in 2001, 2002,
and 2004, this paper explores the determinants of old age support in Taiwan at the
juncture of economic recession and early stage of launching society wide social
security programs. Data show that the impact of such a change in public programs
of old age support has little effect. Instead, sons and daughters are managed at the
time of economic recession to continue to provide support for elderly parents in
monetary terms. Family support for the elderly is still strong and pervasive.
The results clearly show some reservation on the power and bargaining model,
which can hardly explain the ways of support provided among females, and has very
little power to explain what male adult children will be doing their parents. The only
effective factor to provide a explanation is socioeconomic status of parents, but it only
applies to male children.
What is worth special attention is the difference in providing support
between males and females. While both the mutual aid model and the
altruistic/repayment model are supported in the analysis, that the mutual aid model
works better well among females strongly suggests a role played by women in
striking a balance of taking care of the needs of her married family and her own
parents.
References
Becker, G. S. (1991). A Treatise on the Family. Cambridge, Mass: Harvard
University Press.
Becker, G. S. & Nigel Tomes. (1979) “An Equilibrium Theory of the Distribution of
Income and Intergenerational Mobility.” Journal of Political Economy 87 (6):
1153-89.
Bernheim, B. D., Schleifer, A. & L. Summers (1985). “The Strategic Bequest
Motive.” Journal of Political Economy 93 (6):1045-76.
Frankenberg, E., Lillard, L., & Willis, R. J. (2002). "Patterns of Intergenerational
Transfers in Southeast Asia." Journal of Marriage and Family 64(3): 627-641.
Greenhalgh, S. (1985). “Sexual Stratification: The Other Side of ‘Growth with
Equity’ in East Asia.” Population and Development Review. 11:265-314.
Hermalin, A. I. (2000). Challenges to Comparative Research on Intergenerational
Transfers, Comparative Study of the Elderly in Asia: Research Report,
no.00-56. Ann Arbor, MI: University of Michigan.
Lee, Y., W. L. Parish, et al. (1994). "Sons, Daughters, and Intergenerational Support in
Taiwan." American Journal of Sociology 99(4): 1010-1041.
Lilliard, L. A. and R. J. Willis (1997). "Motives for Intergenerational Transfers:
Evidence from Malaysia." Demography 34(1, The Demography of Aging ): 115-134
Table 1: Means and Percentage Distributions of Variables
Age Group: Respondent
1) 37-46
45.73
2) 47-56
39.77
3) 57-66
14.51
Gender (%)
46.76
Both parents surviving (%)
36.27
Number of children
2.72
II. Respondent 's need
Whether parents provide help (%)
52.98
2.19
III. Respondent's availability Number of brother
Number of sister
2.16
Years of having more education than
-0.41
siblings
Wife had job (%)
58.68
Income of Respondent family
NTD58,233
female
NTD54,683
male
NTD62,271
Health of living parent(s)(%)
32.64
IV. Parents’ need
Socio-economic status of Parents (*100)
-0.6
V. Parents’ availability
Financial Resource of Parents
I. Demographic Variables
VI. Other
N of observations
1) Pension (%)
2) Subsidy (%)
3) Other (%)
Family property (%)
1) no family property
2) not divide family property yet
3) have divided family property
Migration (%)
1) stay at city
2) stay in rural--base
9.79
64.97
38.21
2) rural to city
Coresidence (%)
1) live alone/with um-kid(s)
2) live with other m-kid(s)
3) live with R--base
Provide support in 2001 (%)
Provide support in 2002 (%)
40.41
33.42
30.96
35.62
31.70
27.89
48.70
30.57
20.73
72.41
68.26
753
Figure 1: Latent Growth Model of Family Income and Old Age Support
Effects between Family Income and Old Age Support
Total sample
Correlation between family income slope and old age support slope
0.01
0.10
Correlation between family income intercept and old age support intercept
0.27*
Correlation between old age intercept and old age support slope
-0.41*
Effects of income intercept on old age support
Correlation between family income intercept and family income intercept
0.01
X2
9.973
RMSEA
N
0.024
738
%
Figure 2: Public-Based Social Security Programs and Old Age Support
(Amount of giving)
100
90
80
70
60
50
40
30
20
10
0
pension
0
5
10
15
20
Amount of Old Age Support
25
unit:NTD1,000
subsidy
other
none
Table 2: Determinants of Giving to Parents and Amounts Given: Logged Values