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The economic consequences of mutual help in extended families

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  • Baland, Jean-Marie
  • Bonjean, Isabelle
  • Guirkinger, Catherine
  • Ziparo, Roberta

Abstract

In the absence of well-developed markets for credit and insurance, extended families play a major role as a traditional system of mutual help. However these arrangements have important consequences on economic choices. In this paper, we use first hand data from Western Cameroon to explore this question. We find that the large majority of transfers follow a given pattern whereby elder siblings support their younger siblings in the early stages of their lives who in turn reciprocate by supporting their elder siblings when they have children. We interpret this pattern as a generalised system of reciprocal credit within the extended family. We propose a simple overlapping generation model to investigate its welfare properties. We then explore the implications of this pattern on labour market outcomes and find evidence of large disincentive effects. This pattern of transfers also implies that younger siblings are more educated but have fewer and less educated children.

Suggested Citation

  • Baland, Jean-Marie & Bonjean, Isabelle & Guirkinger, Catherine & Ziparo, Roberta, 2016. "The economic consequences of mutual help in extended families," Journal of Development Economics, Elsevier, vol. 123(C), pages 38-56.
    • Handle: RePEc:eee:deveco:v:123:y:2016:i:c:p:38-56
    DOI: 10.1016/j.jdeveco.2016.07.004
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    Citations

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    Cited by:

    1. Emla Fitzsimons & Bansi Malde & Marcos Vera-Hernandez, 2015. "Group size and the efficiency of informal risk sharing," IFS Working Papers W15/31, Institute for Fiscal Studies.
    2. Kazianga, Harounan & Wahhaj, Zaki, 2017. "Intra-household resource allocation and familial ties," Journal of Development Economics, Elsevier, vol. 127(C), pages 109-132.
    3. Margherita Calderone, 2017. "Are there different spillover effects from cash transfers to men and women? Impacts on investments in education in post-war Uganda," WIDER Working Paper Series 093, World Institute for Development Economic Research (UNU-WIDER).
    4. Pauline Morault, 2017. "Arranged Marriages under Transferable Utilities," Working Papers halshs-01537971, HAL.
    5. Kazianga, Harounan & Wahhaj, Zaki, 2015. "Norms of Allocation within Nuclear and Extended-Family Households," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205534, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    6. Niaz Asadullah & Zaki Wahhaj, 2016. "Early Marriage, Social Networks and the Transmission of Norms," Studies in Economics 1602, School of Economics, University of Kent.
    7. Boris Gershman, 2016. "Long-Run Development and the New Cultural Economics," Working Papers 2016-06, American University, Department of Economics.
    8. Angelucci, Manuela & De Giorgi, Giacomo & Rasul, Imran, 2017. "consumption and investment in resource pooling family networks," CEPR Discussion Papers 11889, C.E.P.R. Discussion Papers.
    9. Rozenn Hotte & Karine Marazyan, 2017. "Demand for Insurance and Within-Kin-Group Marriage: Evidence from a Western African Country," Working Papers 20170005, Université Paris 1 Panthéon Sorbonne, UMR Développement et Sociétés.
    10. Marie Boltz & Karine Marazyan & Paola Villar, 2016. "Income Hiding and Informal Redistribution: A Lab in the Field Experiment in Senegal," PSE Working Papers halshs-01157710, HAL.
    11. Nathan Fiala, 2017. "Business is Tough, but Family is Worse: Household Bargaining and Investment in Microenterprises in Uganda," Working papers 2017-05, University of Connecticut, Department of Economics.

    More about this item

    Keywords

    Extended families; Africa; Transfers; Mutual help; Solidarity;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation

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