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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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Bibliographic Info

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. Elin Halvorsen & Thor Olav Thoresen, 2008. "Parents' Desire to Make Equal Inter Vivos Transfers," CESifo Working Paper Series 2468, CESifo Group Munich.
  2. Fernandes, A., 2000. "Altruism with Endogenous Labor Supply," Papers 0002, Centro de Estudios Monetarios Y Financieros-.
  3. Yang-Ming Chang, 2009. "Strategic altruistic transfers and rent seeking within the family," Journal of Population Economics, Springer, vol. 22(4), pages 1081-1098, October.
  4. Mohamed Jellal & FranÁois-Charles Wolff, 2003. "Leaving Home as a Self-selection Device," Economica, London School of Economics and Political Science, vol. 70(279), pages 423-438, 08.
  5. François-Charles Wolff, 2006. "Parental transfers and the labor supply of children," Journal of Population Economics, Springer, vol. 19(4), pages 853-877, October.
  6. Joseph G. Altonji & Ernesto Villanueva, 2003. "The Marginal Propensity to Spend on Adult Children," NBER Working Papers 9811, National Bureau of Economic Research, Inc.
  7. Jellal, Mohamed, 2009. "A Theory of Educational Inequality Family and Agency Costs," MPRA Paper 17434, University Library of Munich, Germany.
  8. Jellal, Mohamed, 2009. "Family Capitalism Corporate Governance Theory," MPRA Paper 17886, University Library of Munich, Germany.
  9. Ana Fernandes, 2011. "Altruism, labor supply and redistributive neutrality," Journal of Population Economics, Springer, vol. 24(4), pages 1443-1469, October.
  10. Aysegül Sahin, 2004. "The incentive effects of higher education subsidies on student effort," Staff Reports 192, Federal Reserve Bank of New York.
  11. Elin Halvorsen & Thor O. Thoresen, 2011. "Parents' Desire to Make Equal Inter Vivos Transfers," CESifo Economic Studies, CESifo, vol. 57(1), pages 121-155, March.
  12. Javier OLIVERA ANGULO, 2011. "The division of parental transfers in Europe," Center for Economic Studies - Discussion papers ces11.20, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  13. 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".

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