In this article, we provide a theory that is able to account for the observed co-movement between the shift in intergenerational living arrangements from coresidence to non-coresidence and economic growth. Our theory is consistent with the diminution in the status of the elderly documented by somesociologists. A significant implication of our theory is that while explanations of the shift in the living arrangements that are based on pure economic factors are compatible with the evidence, those relying on cultural factors are not.