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Parental Altruism under Imperfect Information: Theory and Evidence

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Author Info
Ernesto Villanueva

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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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Related research
Keywords: Altruism; imperfect information; intervivos transfers;

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Find related papers by JEL classification:
D19 - Microeconomics - - Household Behavior - - - Other
D64 - Microeconomics - - Welfare Economics - - - Altruism
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped
H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

References listed on IDEAS
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    Other versions:
  2. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June. [Downloadable!] (restricted)
  4. Poterba, James, 2001. "Estate and gift taxes and incentives for inter vivos giving in the US," Journal of Public Economics, Elsevier, vol. 79(1), pages 237-264, January. [Downloadable!] (restricted)
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  7. David Card & Thomas Lemieux, 1997. "Adapting to Circumstances: The Evolution of Work, School, and Living Arrangements Among North American Youth," NBER Working Papers 6142, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec.. [Downloadable!] (restricted)
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  11. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier. [Downloadable!] (restricted)
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  12. Cochrane, John H, 1991. "A Simple Test of Consumption Insurance," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 957-76, October. [Downloadable!] (restricted)
  13. Pollak, Robert A, 1988. "Tied Transfers and Paternalistic Preferences," American Economic Review, American Economic Association, vol. 78(2), pages 240-44, May. [Downloadable!] (restricted)
  14. Pierre-Andre Chiappori & Bernard Salanie, 2001. "Testing for Asymmetric Information in Insurance Markets," Journal of Political Economy, University of Chicago Press, vol. 108(1), pages 56-78, February. [Downloadable!] (restricted)
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  15. Joseph G. Altonji & Hidehiko Ichimura & Taisuke Otsu, 2008. "Estimating Derivatives in Nonseparable Models with Limited Dependent Variables," Cowles Foundation Discussion Papers 1668, Cowles Foundation, Yale University. [Downloadable!]
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  16. Kathleen McGarry & Robert F. Schoeni, 1994. "Transfer Behavior: Measurement and the Redistribution of Resources within the Family," NBER Working Papers 4607, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  21. Ligon, Ethan, 1994. "Risk-sharing under varying information regimes : theory and measurement in village economies," CUDARE Working Paper Series 727, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
  22. Shinichi Nishiyama & Kent Smetters, 2002. "Ricardian Equivalence with Incomplete Household Risk Sharing," NBER Working Papers 8851, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  24. Mroz, Thomas A, 1987. "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions," Econometrica, Econometric Society, vol. 55(4), pages 765-99, July. [Downloadable!] (restricted)
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  25. Altonji, Joseph G & Hayashi, Fumio & Kotlikoff, Laurence J, 1997. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1121-66, December.
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ana Fernandes, 2000. "Altruism with Endogenous Labor Supply," Econometric Society World Congress 2000 Contributed Papers 0844, Econometric Society. [Downloadable!]
    Other versions:
  2. Joseph Altonji & Ernesto Villanueva, 2003. "The Marginal Propensity to Spend on Adult Children," Economics Working Papers 667, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
    Other versions:
  3. repec:bep:eapadv:v:7:y:2007:i:1:p:1488-1488 is not listed on IDEAS
  4. Elin Halvorsen & Thor Olav Thoresen, 2008. "Parents' Desire to Make Equal Inter Vivos Transfers," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  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. [Downloadable!] (restricted)
  6. Aysegul Sahin, 2004. "The incentive effects of higher education subsidies on student effort," Staff Reports 192, Federal Reserve Bank of New York. [Downloadable!]
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