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Leaving Home as a Self-selection Device

  • Mohamed Jellal
  • FranÁois-Charles Wolff

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.

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Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 70 (2003)
Issue (Month): 279 (08)
Pages: 423-438

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Handle: RePEc:bla:econom:v:70:y:2003:i:279:p:423-438
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  1. Ernesto Villanueva, 2003. "Parental altruism under imperfect information: theory and evidence," Working Papers 19, Barcelona Graduate School of Economics.
  2. François-Charles Wolff, 2000. "Transferts monétaires "inter vivos" et cycle de vie," Revue Économique, Programme National Persée, vol. 51(6), pages 1419-1452.
  3. Lingxin Hao & V. Joseph Hotz & Ginger Zhe Jin, 2000. "Games Daughters and Parents Play: Teenage Childbearing, Parental Reputation, and Strategic Transfers," JCPR Working Papers 167, Northwestern University/University of Chicago Joint Center for Poverty Research.
  4. Anne Laferrere, 1997. "Intergenerational Transmission Models :A Survey," Working Papers 97-23, Centre de Recherche en Economie et Statistique.
  5. Rosenzweig, Mark R & Wolpin, Kenneth I, 1993. "Intergenerational Support and the Life-Cycle Incomes of Young Men and Their Parents: Human Capital Investments, Coresidence, and Intergenerational Financial Transfers," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 84-112, January.
  6. CREMER, Helmuth & PESTIAU, Pierre, 1993. "Bequests as a heir : "Discipline device"," CORE Discussion Papers 1993041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Jean Tirole, 1999. "Incomplete Contracts: Where Do We Stand?," Econometrica, Econometric Society, vol. 67(4), pages 741-782, July.
  8. Laurence J. Kotlikoff & Lawrence H. Summers, 1980. "The Role of Intergenerational Transfers in Aggregate Capital Accumulation," NBER Working Papers 0445, National Bureau of Economic Research, Inc.
  9. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, June.
  10. CREMER, Helmuth & PESTIEAU, Pierre, . "Delaying inter vivos transmissions under asymmetric information," CORE Discussion Papers RP 1346, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Chami, Ralph, 1996. "King Lear's dilemma: Precommitment versus the last word," Economics Letters, Elsevier, vol. 52(2), pages 171-176, August.
  12. Modigliani, Franco, 1988. "The Role of Intergenerational Transfers and Life Cycle Saving in the Accumulation of Wealth," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 15-40, Spring.
  13. Shleifer, Andrei & Summers, Lawrence H. & Bernheim, B. Douglas, 1986. "The Strategic Bequest Motive," Scholarly Articles 3721794, Harvard University Department of Economics.
  14. Joseph G. Altonji & Fumio Hayashi & Laurence Kotlikoff, . "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," IPR working papers 95-22, Institute for Policy Resarch at Northwestern University.
  15. Chami, Ralph, 1998. "Private Income Transfers and Market Incentives," Economica, London School of Economics and Political Science, vol. 65(260), pages 557-80, November.
  16. Alessandro Cigno & Annalisa Luporini & Anna Pettini, 2000. "Tranfers to families with children as a principal-agent problem," CHILD Working Papers wp02_00, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
  17. Fernandes, A., 2000. "Altruism with Endogenous Labor Supply," Papers 0002, Centro de Estudios Monetarios Y Financieros-.
  18. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
  19. Kessler, Denis & Masson, Andre, 1989. "Bequest and Wealth Accumulation: Are Some Pieces of the Puzzle Missing?," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 141-52, Summer.
  20. Ermisch, John F, 1996. "Parental Support for Human Capital Investment by Young Adults," CEPR Discussion Papers 1536, C.E.P.R. Discussion Papers.
  21. F. C. Wolff, 1999. "Altruisme et corésidence en France," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 164, pages 458-488.
  22. Cox, Donald & Rank, Mark R, 1992. "Inter-vivos Transfers and Intergenerational Exchange," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 305-14, May.
  23. Cigno, Alessandro, 1993. "Intergenerational transfers without altruism : Family, market and state," European Journal of Political Economy, Elsevier, vol. 9(4), pages 505-518, November.
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