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Leaving home as a self-selection device

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  • Jellal, Mohamed
  • Wolff, François Charles

Abstract

We develop a model of intergeneratioal coresidence and transfers within the family in a setting of asymmetric information. Following an exchange motive altruistic parents receive services from their children, who may make them financial gifts in return. However, parents do not know the privacyc ost to children of home-sharing .Hence they make additional transfers in order to discipline their children and give them incentives to reveal their true privacy cost. We show that only children who stay at the parental home receive an informational rent, and that this rent is greaterf or recipients with a low privacy cost.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 38528.

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Date of creation: 2003
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Handle: RePEc:pra:mprapa:38528

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Keywords: Family Exchanges; Transfers; Information; Co-residence;

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References

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  1. Kessler, Denis & Masson, Andre, 1989. "Bequest and Wealth Accumulation: Are Some Pieces of the Puzzle Missing?," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 3(3), pages 141-52, Summer.
  2. Ermisch, John F, 1996. "Parental Support for Human Capital Investment by Young Adults," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1536, C.E.P.R. Discussion Papers.
  3. Anne Laferrere, 1999. "Intergenerational Transmission Models: A Survey," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 24(1), pages 2-26, January.
  4. Cremer, H. & Pestieau, P., . "Bequests as a heir ``discipline device''," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -1239, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262121743, December.
  6. Joseph G. Altonji & Fumio Hayashi & Laurence Kotlikoff, 1995. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," NBER Working Papers 5378, National Bureau of Economic Research, Inc.
  7. Alessandro Cigno & Annalisa Luporini & Anna Pettini, 2000. "Tranfers to families with children as a principal-agent problem," CHILD Working Papers, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY wp02_00, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
  8. F. C. Wolff, 1999. "Altruisme et corésidence en France," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, ULB -- Universite Libre de Bruxelles, vol. 164, pages 458-488.
  9. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 95(3), pages 508-46, June.
  10. H. Cremer & P. Pestieau, 1998. "Delaying Inter Vivos Transmissions Under Asymmetric Information," Southern Economic Journal, Southern Economic Association, Southern Economic Association, vol. 65(2), pages 322-330, October.
  11. Chami, Ralph, 1998. "Private Income Transfers and Market Incentives," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 65(260), pages 557-80, November.
  12. Shleifer, Andrei & Summers, Lawrence H. & Bernheim, B. Douglas, 1986. "The Strategic Bequest Motive," Scholarly Articles 3721794, Harvard University Department of Economics.
  13. Modigliani, Franco, 1988. "The Role of Intergenerational Transfers and Life Cycle Saving in the Accumulation of Wealth," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 2(2), pages 15-40, Spring.
  14. Ernesto Villanueva, 2002. "Parental altruism under imperfect information: Theory and evidence," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 650, Department of Economics and Business, Universitat Pompeu Fabra.
  15. François-Charles Wolff, 2000. "Transferts monétaires "inter vivos" et cycle de vie," Revue Économique, Programme National Persée, Programme National Persée, vol. 51(6), pages 1419-1452.
  16. Kotlikoff, Laurence J & Summers, Lawrence H, 1981. "The Role of Intergenerational Transfers in Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 89(4), pages 706-32, August.
  17. Cigno, Alessandro, 1993. "Intergenerational transfers without altruism : Family, market and state," European Journal of Political Economy, Elsevier, Elsevier, vol. 9(4), pages 505-518, November.
  18. Jean Tirole, 1999. "Incomplete Contracts: Where Do We Stand?," Econometrica, Econometric Society, Econometric Society, vol. 67(4), pages 741-782, July.
  19. Fernandes, A., 2000. "Altruism with Endogenous Labor Supply," Papers, Centro de Estudios Monetarios Y Financieros- 0002, Centro de Estudios Monetarios Y Financieros-.
  20. Rosenzweig, Mark R & Wolpin, Kenneth I, 1993. "Intergenerational Support and the Life-Cycle Incomes of Young Men and Their Parents: Human Capital Investments, Coresidence, and Intergenerational Financial Transfers," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 11(1), pages 84-112, January.
  21. Lingxin Hao & V. Joseph Hotz & Ginger Zhe Jin, 2000. "Games Daughters and Parents Play: Teenage Childbearing, Parental Reputation, and Strategic Transfers," NBER Working Papers 7670, National Bureau of Economic Research, Inc.
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Cited by:
  1. Jellal, Mohamed, 2009. "A Theory of Educational Inequality Family and Agency Costs," MPRA Paper 17434, University Library of Munich, Germany.
  2. Jellal, Mohamed, 2009. "Family Capitalism Corporate Governance Theory," MPRA Paper 17886, University Library of Munich, Germany.
  3. Jellal, Mohamed, 2014. "A theory of family education incentives and inequality," MPRA Paper 57913, University Library of Munich, Germany.

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