Who Cares for the Elderly? Intrafamily Resource Allocation and Migration in Mexico
AbstractChildren are sometimes viewed as a method of insuring against disability and providing income after retirement, especially in developing countries with limited markets for credit and insurance. But how do children decide on how much care to provide to their parents in old age, particularly in families with many children? This paper takes a non-cooperative view of family decision-making and estimates best response functions for individual physical and financial contributions as a function of siblings' contributions. I account for the endogeneity of siblings' contributions by using siblings' characteristics as instrumental variables. By estimating these decisions as part of a two-stage game that includes a migration decision, I also consider the impact of migration on elderly care. I find evidence that children's financial contributions function as strategic complements while their time contributions operate as strategic substitutes, suggesting that giving may be based on both strategic bequest and public good motivations. Despite these findings, evidence from a simulation generating an exogenous switch in child's migrant status shows a likely decrease in time and financial contributions for most elderly parents.
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Bibliographic InfoPaper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 06-031.
Date of creation: Jan 2007
Date of revision:
elderly care; intrafamily allocation; migration;
Find related papers by JEL classification:
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
- D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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