Private transfers within the family can promote the welfare of family members. As a typical form of intergenerational transfers, the monetary support of adult children to parents often constitutes the source of funds for parents’ consumption and pension. However, research on the relationship between living arrangements and intergenerational financial support is still limited, and there is still room for discussion in existing literature. Based on this, using China Health and Retirement Longitudinal Study (CHARLS) data, this paper studies the influence of living arrangement on the children’s monetary support to parents and its internal mechanism and finds that intergenerational monetary support has a proximity effect whether in extensive or intensive margin. Estimation results based on mixed logit and mixed OLS show that, compared with children living with their parents, the probability of monetary support given to parents by children who live separately in the same community decreases by 0. 04 and the amount of monetary support decreases by 587 yuan. Children living apart from their parents in different communities or farther away does not affect the probability of money transfer, but affects the amount of money transfer. The estimated result of family fixed-effect model shows that the amount of money transfer is reduced by 373 yuan compared with that of children living with their parents. When the samples were grouped by age and estimated considering possible endogeneity issues, the proximity effect still robust. Further investigation of the causal mechanism reveals that part of the reason for this difference in intergenerational money transfer is that parents who live near to their children provide more services or time transfer for their children, and then children give their parents with monetary support to compensate for the services. This mechanism supports exchange motive for intergenerational transfer. Therefore, policies need to pay attention to empty-nest families whose parents live alone, improve the income redistribution system, clarify and coordinate the roles of government, market, and family in building a social and economic safety net, and form a multi-level, multi-pillar social security system.
