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Parental altruism under imperfect information: Theory and evidence

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  • Ernesto Villanueva

Abstract

Can we reconcile the predictions of the altruism model of the family with the evidence on intervivos transfers in the US? This paper expands the altruism model by introducing e ?ort of the child and by relaxing the assumption of perfect information of the parent about the labor market opportunities of the child. First, I solve and simulate a model of altruism under imperfect information. Second, I use cross-sectional data to test a prediction of the model: Are parental transfers especially responsive to the income variations of children who are very attached to the labor market? The results suggest that imperfect information accounts for several patterns of intergenerational transfers in the US.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 650.

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Date of creation: Sep 2002
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Handle: RePEc:upf:upfgen:650

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Web page: http://www.econ.upf.edu/

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Keywords: Altruism; imperfect information; intervivos transfers;

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Citations

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Cited by:
  1. Altonji Joseph G & Villanueva Ernesto, 2007. "The Marginal Propensity to Spend on Adult Children," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-52, February.
  2. Giacomo Pasini & Rob Alessie & Viola Angelini, 2011. "Is it true love? Altruism versus exchange in time and money transfers," Working Papers 2011_27, Department of Economics, University of Venice "Ca' Foscari".
  3. Jellal, Mohamed, 2009. "Family Capitalism Corporate Governance Theory," MPRA Paper 17886, University Library of Munich, Germany.
  4. Javier Olivera Angulo, 2012. "The division of parental transfers in Europe," Working Papers, Geary Institute, University College Dublin 201220, Geary Institute, University College Dublin.
  5. Aysegül Sahin, 2004. "The incentive effects of higher education subsidies on student effort," Staff Reports 192, Federal Reserve Bank of New York.
  6. Elin Halvorsen & Thor Olav Thoresen, 2008. "Parents' Desire to Make Equal Inter Vivos Transfers," CESifo Working Paper Series 2468, CESifo Group Munich.
  7. Jellal, Mohamed, 2009. "A Theory of Educational Inequality Family and Agency Costs," MPRA Paper 17434, University Library of Munich, Germany.
  8. Ana Fernandes, 2000. "Altruism with Endogenous Labor Supply," Econometric Society World Congress 2000 Contributed Papers 0844, Econometric Society.
  9. Ana Fernandes, 2011. "Altruism, labor supply and redistributive neutrality," Journal of Population Economics, Springer, Springer, vol. 24(4), pages 1443-1469, October.
  10. François-Charles Wolff, 2006. "Parental transfers and the labor supply of children," Journal of Population Economics, Springer, Springer, vol. 19(4), pages 853-877, October.
  11. Elin Halvorsen & Thor O. Thoresen, 2011. "Parents' Desire to Make Equal Inter Vivos Transfers," CESifo Economic Studies, CESifo, CESifo, vol. 57(1), pages 121-155, March.
  12. Jellal, Mohamed & Wolff, François Charles, 2003. "Leaving home as a self-selection device," MPRA Paper 38528, University Library of Munich, Germany.
  13. Yang-Ming Chang, 2009. "Strategic altruistic transfers and rent seeking within the family," Journal of Population Economics, Springer, Springer, vol. 22(4), pages 1081-1098, October.

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