On the Demand for Grandchildren: Tied Transfers and the Demonstration Effect
Abstract
Most private giving between living generations takes the form of "tied" transfers, such as help with housing downpayments. We argue that parents provide help with downpayments in order to encourage the production of grandchildren, and that such a subsidization emanates from the "demonstration effect:" a child's propensity to furnish parents with attention and care can be conditioned by parental example. Parents who desire such transfers in the future have an incentive to make transfers to their own parents in order to instill appropriate preferences in their children. This generates a derived demand for grandchildren since potential grandparents will be treated better by their adult children if the latter have their own children to whom to demonstrate the appropriate behavior. Empirical work, based on waves 1 and 2 of the National Survey of Families and Households, indicates behavior consistent with subsidization of the production of grandchildren and the demonstration effect.Download Info
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Paper provided by Institute for Advanced Studies in its series Economics Series with number 158.Length: 39 pages
Date of creation: May 2004
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Handle: RePEc:ihs:ihsesp:158
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Keywords: Intergenerational transfers; The demonstration effect; Inculcating values in children; Subsidizing the production of grandchildren; Housing downpayments;Other versions of this item:
- Cox, Donald & Stark, Oded, 2005. "On the demand for grandchildren: tied transfers and the demonstration effect," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1665-1697, September.
- Cox, Donald & Stark, Oded, 2004. "On The Demand For Grandchildren: Tied Transfers And The Demonstration Effect," Discussion Papers 18751, University of Bonn, Center for Development Research (ZEF).
- A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
- D10 - Microeconomics - - Household Behavior - - - General
- I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General
- J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
- J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
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