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Leaving Home as a Self-selection Device

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  • Mohamed Jellal
  • FranÁois-Charles Wolff

Abstract

We develop a model of intergenerational co-residence 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 privacy cost 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 greater for recipients with a low privacy cost. Copyright The London School of Economics and Political Science 2003.

Suggested Citation

  • 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, August.
  • Handle: RePEc:bla:econom:v:70:y:2003:i:279:p:423-438
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    References listed on IDEAS

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    Cited by:

    1. Wolff, Francois-Charles, 2006. "Microeconomic models of family transfers," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
    2. Jellal, Mohamed, 2014. "A theory of family education incentives and inequality," MPRA Paper 57913, University Library of Munich, Germany.
    3. Jellal, Mohamed, 2009. "A Theory of Educational Inequality Family and Agency Costs," MPRA Paper 17434, University Library of Munich, Germany.
    4. Jellal, Mohamed, 2009. "Family Capitalism Corporate Governance Theory," MPRA Paper 17886, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D1 - Microeconomics - - Household Behavior

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