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Family Versus Public Solidarity: Theory and Experiment

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  • Güth, W.
  • Sutter, M.
  • Verbon, H.A.A.
  • Weck-Hannemann, H.

    (Tilburg University, Center for Economic Research)

Abstract

We present an overlapping generations model with two families who can guarantee old age support either by intra-family transfers from child to parent or via a tax-financed public pension system encompassing both families.We derive the individually and family-specific optimal decisions and present some more behavioristic hypotheses.Our experimental observations allow conclusions on (1) whether raising taxes crowds out voluntary transfers, (2) how income distributions influence family and public solidarity, and (3) whether participants prefer more to less public solidarity.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2001-86.

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Date of creation: 2001
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Handle: RePEc:dgr:kubcen:200186

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Related research

Keywords: voting; pensions; families; overlapping generations;

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  7. James Andreoni, 2001. "Giving According to GARP," Theory workshop papers 339, UCLA Department of Economics.
  8. Güth, W. & Offerman, T.J.S. & Potters, J.J.M. & Strobel, M. & Verbon, H.A.A., 2000. "An Experimental Study in the Crowding-Out Effect of Public Transfers in a Model with Multiple Families," Discussion Paper 2000-54, Tilburg University, Center for Economic Research.
  9. Warr, Peter G., 1983. "The private provision of a public good is independent of the distribution of income," Economics Letters, Elsevier, vol. 13(2-3), pages 207-211.
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  15. Kenneth Chan & Stuart Mestelman & Robert Moir & R. Muller, 1999. "Heterogeneity and the Voluntary Provision of Public Goods," Experimental Economics, Springer, vol. 2(1), pages 5-30, August.
  16. Chan, Kenneth S. & Mestelman, Stuart & Muller, R. Andrew, 2008. "Voluntary Provision of Public Goods," Handbook of Experimental Economics Results, Elsevier.
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Cited by:
  1. Werner Güth & Sabine Strauß & Matthias Sutter, 2002. "Tax evasion and state productivity – An experimental study," Papers on Strategic Interaction 2002-37, Max Planck Institute of Economics, Strategic Interaction Group.

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