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Family Altruism and Incentives

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  • Roberta Gatti

Abstract

This paper characterizes the pattern of intergenerational transfers that emerges in an altruistic model of the family when children's effort is explicitly made endogenous and parents have imperfect information on the stochastic income realizations of their children. It is shown that, if parents can credibly commit to a pattern of transfers, they will choose not to compensate children in bad outcomes as much as predicted by the standard (no uncertainty, no asymmetric information) dynastic model of the family. In this context, Ricardian equivalence holds whenever non-negativity constraints are not binding. Copyright The editors of the "Scandinavian Journal of Economics", 2005 .

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  • Roberta Gatti, 2005. "Family Altruism and Incentives," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 67-81, March.
  • Handle: RePEc:bla:scandj:v:107:y:2005:i:1:p:67-81
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    Cited by:

    1. Degan, Arianna & Thibault, Emmanuel, 2016. "Dynastic accumulation of wealth," Mathematical Social Sciences, Elsevier, vol. 81(C), pages 66-78.
    2. Ana Fernandes, 2011. "Altruism, labor supply and redistributive neutrality," Journal of Population Economics, Springer;European Society for Population Economics, pages 1443-1469.
    3. Fernandes, A., 2000. "Altruism with Endogenous Labor Supply," Papers 0002, Centro de Estudios Monetarios Y Financieros-.
    4. Erlend E. Bø & Elin Halvorsen & Thor O. Thoresen, 2016. "Heterogeneity of the Carnegie Effect," Discussion Papers 853, Statistics Norway, Research Department.
    5. Gradstein, Mark, 2008. "Endogenous Reversals of Fortune," IZA Discussion Papers 3469, Institute for the Study of Labor (IZA).
    6. Ingela Alger & Jörgen W. Weibull, 2010. "Kinship, Incentives, and Evolution," American Economic Review, American Economic Association, pages 1725-1758.
    7. repec:hal:journl:halshs-00318870 is not listed on IDEAS
    8. Franziska Ziegelmeyer, 2010. "Elterliche Stellvertreterentscheidungen und frühkindliche Humankapitalbildung," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 79(3), pages 57-77.
    9. François-Charles Wolff, 2006. "Parental transfers and the labor supply of children," Journal of Population Economics, Springer;European Society for Population Economics, pages 853-877.
    10. Ingela Alger & Jörgen W. Weibull, 2010. "Kinship, Incentives, and Evolution," American Economic Review, American Economic Association, pages 1725-1758.
    11. Schüler, Dana, 2007. "Incentive Effects of Transfers within the Extended Family: The Case of Indonesia," Proceedings of the German Development Economics Conference, Göttingen 2007 29, Verein für Socialpolitik, Research Committee Development Economics.
    12. Günther Fink & Silvia Redaelli, 2005. "Understanding Bequest Motives An Empirical Analysis of Intergenerational Transfers," DNB Working Papers 042, Netherlands Central Bank, Research Department.
    13. Naiditch, Claire & Vranceanu, Radu, 2009. "Migrant wages, remittances and recipient labour supply in a moral hazard model," Economic Systems, Elsevier, vol. 33(1), pages 60-82, March.
    14. Erlend Eide Bø & Elin Halvorsen & Thor Olav Thoresen, 2015. "Heterogeneity of the Carnegie Effect," CESifo Working Paper Series 5339, CESifo Group Munich.
    15. Jellal, Mohamed, 2009. "A Theory of Educational Inequality Family and Agency Costs," MPRA Paper 17434, University Library of Munich, Germany.
    16. Leonardo Bursztyn & Lucas C. Coffman, 2012. "The Schooling Decision: Family Preferences, Intergenerational Conflict, and Moral Hazard in the Brazilian Favelas," Journal of Political Economy, University of Chicago Press, vol. 120(3), pages 359-397.
    17. Jellal, Mohamed, 2009. "Family Capitalism Corporate Governance Theory," MPRA Paper 17886, University Library of Munich, Germany.
    18. James Berry, 2015. "Child Control in Education Decisions: An Evaluation of Targeted Incentives to Learn in India," Journal of Human Resources, University of Wisconsin Press, vol. 50(4), pages 1051-1080.

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