We analyze the relationship between the family and the Welfare State when intra-family transfers are governed by risk-sharing considerations (i.e. not by altruism). For the benchmarl case, the classic neutrality result is obtained: more generous unemployment benefits, provided by the State, crowd out family risk-sharing arrangements one-for-one. The model is extended to capture the idea that families have an advantage at monitoring the search activities of the unemployed, whereas the State has an advantage at enforcing risk-sharing contracts through taxation.
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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number
99195.
Find related papers by JEL classification: J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
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