Intergenerational altruism and transfers of time and money: a life cycle perspective

Parental transfers of time, education, and money shape intergenerational mobility. Using panel data from birth to retirement, we estimate child skill production functions and embed them in a dynastic model of parental investment. We find that parental time investments have a dual purpose: investments increase children's human capital, but parents also enjoy time spent with children more than work. We then assess the effects of relaxing intergenerational borrowing constraints via student loans: student loans reduce persistence in earnings and education and raise parental welfare. However, while children newly able to attend college experience welfare gains, on average the higher debt levels reduce children's welfare.