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Does the Welfare State Destroy the Family?

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  • Di Tella, R.
  • MacCulloch, R.

Abstract

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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Bibliographic Info

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 99195.

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Length: 37 pages
Date of creation: 1997
Date of revision:
Handle: RePEc:oxf:wpaper:99195

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Keywords: FAMILY ; SOCIAL WELFARE;

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Cited by:
  1. DiTella, Rafael & MacCulloch, Robert, 1999. "Informal family insurance and the design of the welfare state," ZEI Working Papers B 23-1999, ZEI - Center for European Integration Studies, University of Bonn.

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