Inequality and socio-economic divides in parental transfers to young adults in the United States

Abstract Parental transfers of money and co-residence to young-adult children can serve as means of status reproduction. Yet, the relationship between inequality and socio-economic gaps in these forms of parental support has not been studied. Inequality may widen socio-economic differentials in monetary and co-residential transfers, potentially hindering social mobility. I test the association between income inequality and socio-economic divides in parental support to children aged 22–35 in the United States (U.S.), a context where the economic dependence of young adults has increased over decades of high or rising inequality. I link state-level inequality data to longitudinal data on 39,626 parent–child dyads from the Health and Retirement Study (1992–2018). Using state fixed-effects models I investigate how changes in income inequality within states relate to changes in wealth, income, and educational gradients in parental transfers over time. Socio-economic differences in the occurrence and amount of money transfers widen with inequality, as the probability of monetary support decreases among lower-class and lower-educated parents, while the amounts transferred increase among upper-class and higher-educated parents. Moreover, in times of higher inequality, co-residence is more strongly concentrated among lower-class, lower-educated parents. Previous research indicates that receiving money improves labor and housing market outcomes, while co-residence may restrict economic opportunities among young adults from disadvantaged backgrounds. In light of this, my findings suggest that rising U.S. inequality may hinder social mobility by shifting the socio-economic distribution of intergenerational support.