Of rotten kids and Rawlsian parents: The optimal timing of intergenerational transfers
AbstractThis paper shows that altruistic parents with utilitarian preferences may fare better if they transfer resources to their children early in life instead of delaying the bulk of transfers until after their death. Moreover, the outcome of the analysed "family transfer game" is not Pareto-efficient in the case of bequests. However, if altruistic parents hold Rawlsian preferences, they will be indifferent between gifts and bequests, and Pareto-efficiency is always obtained. In intermediate cases of Atkinson-type welfare functions, welfare losses of bequests compared to gifts disappear as the aversion to inequality converges to infinity.
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Bibliographic InfoArticle provided by Springer in its journal Journal of Population Economics.
Volume (Year): 13 (2000)
Issue (Month): 1 ()
Note: Received: 3 November 1998/Accepted: 4 May 1999
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Web page: http://link.springer.de/link/service/journals/00148/index.htm
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- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
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