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Leaving Home as a Self-selection Device

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  • Mohamed Jellal
  • FranÁois-Charles Wolff

Abstract

We develop a model of intergenerational co-residence and transfers within the family in a setting of asymmetric information. Following an exchange motive, altruistic parents receive services from their children, who may make them financial gifts in return. However, parents do not know the privacy cost to children of home-sharing. Hence they make additional transfers in order to discipline their children and give them incentives to reveal their true privacy cost. We show that only children who stay at the parental home receive an informational rent, and that this rent is greater for recipients with a low privacy cost. Copyright The London School of Economics and Political Science 2003.

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Bibliographic Info

Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 70 (2003)
Issue (Month): 279 (08)
Pages: 423-438

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Handle: RePEc:bla:econom:v:70:y:2003:i:279:p:423-438

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  1. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, January.
  2. Fernandes, A., 2000. "Altruism with Endogenous Labor Supply," Papers 0002, Centro de Estudios Monetarios Y Financieros-.
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  6. Joseph G. Altonji & Fumio Hayashi & Laurence Kotlikoff, 1995. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," NBER Working Papers 5378, National Bureau of Economic Research, Inc.
  7. Ernesto Villanueva, 2002. "Parental altruism under imperfect information: Theory and evidence," Economics Working Papers 650, Department of Economics and Business, Universitat Pompeu Fabra.
  8. Chami, Ralph, 1996. "King Lear's dilemma: Precommitment versus the last word," Economics Letters, Elsevier, vol. 52(2), pages 171-176, August.
  9. Anne Laferrere, 1999. "Intergenerational Transmission Models: A Survey," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 24(1), pages 2-26, January.
  10. François-Charles Wolff, 2000. "Transferts monétaires "inter vivos" et cycle de vie," Revue économique, Presses de Sciences-Po, vol. 0(6), pages 1419-1452.
  11. Shleifer, Andrei & Summers, Lawrence H. & Bernheim, B. Douglas, 1986. "The Strategic Bequest Motive," Scholarly Articles 3721794, Harvard University Department of Economics.
  12. Cremer, Helmuth & Pestieau, Pierre, 1996. "Bequests as a Heir "Discipline Device."," Journal of Population Economics, Springer, vol. 9(4), pages 405-14, November.
  13. Lingxin Hao & V. Joseph Hotz & Ginger Zhe Jin, 2000. "Games Daughters and Parents Play: Teenage Childbearing, Parental Reputation, and Strategic Transfers," NBER Working Papers 7670, National Bureau of Economic Research, Inc.
  14. Modigliani, Franco, 1988. "The Role of Intergenerational Transfers and Life Cycle Saving in the Accumulation of Wealth," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 15-40, Spring.
  15. Alessandro Cigno & Annalisa Luporini & Anna Pettini, 2000. "Tranfers to families with children as a principal-agent problem," CHILD Working Papers wp02_00, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
  16. Jean Tirole, 1999. "Incomplete Contracts: Where Do We Stand?," Econometrica, Econometric Society, vol. 67(4), pages 741-782, July.
  17. F. C. Wolff, 1999. "Altruisme et corésidence en France," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 164, pages 458-488.
  18. Cox, Donald & Rank, Mark R, 1992. "Inter-vivos Transfers and Intergenerational Exchange," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 305-14, May.
  19. Ermisch, John F, 1996. "Parental Support for Human Capital Investment by Young Adults," CEPR Discussion Papers 1536, C.E.P.R. Discussion Papers.
  20. Cigno, Alessandro, 1993. "Intergenerational transfers without altruism : Family, market and state," European Journal of Political Economy, Elsevier, vol. 9(4), pages 505-518, November.
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Cited by:
  1. Jellal, Mohamed, 2009. "A Theory of Educational Inequality Family and Agency Costs," MPRA Paper 17434, University Library of Munich, Germany.
  2. Jellal, Mohamed, 2009. "Family Capitalism Corporate Governance Theory," MPRA Paper 17886, University Library of Munich, Germany.

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