Page 107 - IJPS-11-4

International Journal of
Population Studies Intergenerational transfers in Malaysia

Since 2020, Malaysia has become a country with an aging perspective of respondents and their parents, as well as
population. As of 2022, there are about 2.4 million persons respondents and their children.
in Malaysia who are 65 years of age or older (DOSM, Living in a multigenerational household that extends
2022). Malaysia is projected to become a country with an to three generations is quite common in Malaysia. For
aged population by 2040. example, in MARS Wave-1 data, it is found that 10.8%
The aging population in Malaysia presents significant of respondents live together with their children and
challenges since it puts more strain on those of working parents under the same roof. The household structure
age, particularly the “sandwiched generation,” who must can be a significant factor in determining the pattern of
financially provide for their parents and children at the intergenerational transfers in Malaysia.
same time. For every 100 persons of working age, the In this paper, three research questions will be addressed:
old-age dependency ratio is predicted to rise from 7.4 in (1) What are the patterns and flow of intergenerational
2010 to 21.7 in 2040 (DOSM, 2016). There will be more transfers in Malaysia, whether upstream or
older people who need to be supported by the working-age downstream?
population in the future. (2) How do sociodemographic and socioeconomic
Meanwhile, the fertility rate fell below the 2.1 national backgrounds affect the pattern of intergenerational
replacement level in 2021, falling from 4.9 children per transfers in Malaysia?
woman in 1970 to 1.6 in 2022 (DOSM, 2023). The reasons (3) What motivates intergenerational transfers in
behind Malaysian women’s declining fertility rate can be Malaysia?
attributed to the increasing participation of women in the Findings from this study can help policymakers better
labor force, delay in marriage among women, and the spike comprehend Malaysia’s aging population, especially with
in childcare costs in recent years (Bakar & Abdulah, 2010; regard to old-age financial security. Furthermore, it can
Hartani et al., 2015; Jones, 2007; Tey et al., 2012; Tang & serve as valuable input in policy formulation to improve
Tey, 2017). coverage and adequacy of existing social protection
Concerns about income security and the ability of programs, strengthen family support systems, and raise
most Malaysian adults to live well in old age are a result public awareness on the importance of having good
of several structural problems, including the lack of social financial management.
protection coverage and adequacy, as well as low earnings
that result in poor retirement savings. As a result, transfers 1.1. Motives, flow, and factors associated with
from family members are a major source of income for intergenerational transfers
many Malaysian individuals, particularly older persons Willis (1979) proposed the old-age security hypothesis, in
(Masud et al., 2008). Strong familial ties and a culture of which individuals in traditional society rely on transfers
filial piety are also common among Malaysians (Aziz & from their children for financial security during old age.
Yusooff, 2012). Therefore, intergenerational transfers are a Financial support given to parents may occur out of the
recurrent pattern among Malaysian families, independent altruistic behavior of the children (Becker, 1974). It can
of their motivations, which could either be driven by old- also act as an exchange or payment for services provided
age security, unselfish altruism, or even paying back earlier by the parents such as taking care of grandchildren and
educational expenditures made for the children (Lillard & helping with domestic chores (Bernheim et al., 1985). The
Willis, 1997). parental repayment theory, which holds that parents may
The flow and direction of intergenerational transfers are receive financial assistance in exchange for prior human
determined by a number of factors. The intergenerational capital expenditures they made, such as paying for their
transfer debate is important because the average family size children’s education, is another primary driver (Becker &
in Malaysia is expected to become smaller due to declining Tomes, 1976).
birth rates and fertility rates. As a result, financial support Intergenerational financial transfers, particularly
from families will soon decline, as evidenced in numerous upstream transfers from younger to older generations,
studies (Chou, 2010; Knodel et al., 2000; Logan & Bian, are commonly observed in developing countries due to a
2003; Zimmer & Kwong, 2003). lack of formal pension coverage and stable income during
Using Malaysia Ageing and Retirement Survey retirement (Chan, 2005; Knodel et al., 2000; Lillard &
(MARS) Wave-1 data, this study intends to analyze the Willis, 1997; Logan & Bian, 2003, Zimmer & Kwong, 2003).
factors associated with the amount of intergenerational There are also several past studies documenting the
transfers between three generations in Malaysia, from the factors associated with the amount of intergenerational

Volume 11 Issue 4 (2025) 101 https://doi.org/10.36922/ijps.1326