Bequests as a heir "discipline device"
AbstractThis paper develops a model of inter vivos gifts and bequests in a setting of moral hazard and adverse selection. Altruistic parents do not perfectly know how much effort their children make to earn their living, nor do they know their true level of ability. Inter vivos gifts take place prior to the realization of the children`s earnings whereas at the moment of bequests, parents do observe them. We show that an optimal transfer policy generally uses a mix of inter vivos gifts - deemed as more efficient - and bequests - deemed as more redistributive. JEL classifications: J1, J13
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Bibliographic InfoArticle provided by Springer in its journal Journal of Population Economics.
Volume (Year): 9 (1996)
Issue (Month): 4 ()
Note: Received May 2, 1995 / Accepted September 21, 1995
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Other versions of this item:
- CREMER, Helmuth & PESTIAU, Pierre, 1993. "Bequests as a heir : "Discipline device"," CORE Discussion Papers 1993041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Cremer, H. & Pestieau, P., . "Bequests as a heir ``discipline device''," CORE Discussion Papers RP -1239, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- J1 - Labor and Demographic Economics - - Demographic Economics
- J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
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