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Are Family Transfers Crowded Out by Public Transfers?

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  • Guth, Werner, et al

Abstract

We give an account of an overlapping-generations experiment with multiple families in which voluntary transfers can take the form of support to the elderly or grants to children. Support to the old is a purely inter-generational (intra-family) transfer, whereas grants to children also involve an element of intra-generational (inter-family) redistribution through a compulsory pension system. Our data show that higher compulsory inter-family transfers lead subjects to place relatively more emphasis on support instead of grants: grants are crowded out, but support is not significantly affected. The efficiency of voluntary transfers increases, however. Furthermore, if subjects give transfers, they do not use tokens of direct reciprocity; evidence of indirect reciprocity in transfer behavior can only be obtained for the case where compulsory transfers are high. Copyright 2002 by The editors of the Scandinavian Journal of Economics.

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  • Guth, Werner, et al, 2002. " Are Family Transfers Crowded Out by Public Transfers?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(4), pages 587-604, December.
  • Handle: RePEc:bla:scandj:v:104:y:2002:i:4:p:587-604
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    Cited by:

    1. Artidiatun Adji & James Alm & Paul J. Ferraro, 2009. "Experimental tests of Ricardian equivalence with distortionary versus nondistortionary taxes," Economics Bulletin, AccessEcon, vol. 29(4), pages 2556-2572.

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