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Of rotten kids and Rawlsian parents: The optimal timing of intergenerational transfers

Author

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  • Hendrik JØrges

    () (Department of Economics, University of Dortmund, D-44221 Dortmund, Germany)

Abstract

This paper shows that altruistic parents with utilitarian preferences may fare better if they transfer resources to their children early in life instead of delaying the bulk of transfers until after their death. Moreover, the outcome of the analysed "family transfer game" is not Pareto-efficient in the case of bequests. However, if altruistic parents hold Rawlsian preferences, they will be indifferent between gifts and bequests, and Pareto-efficiency is always obtained. In intermediate cases of Atkinson-type welfare functions, welfare losses of bequests compared to gifts disappear as the aversion to inequality converges to infinity.

Suggested Citation

  • Hendrik JØrges, 2000. "Of rotten kids and Rawlsian parents: The optimal timing of intergenerational transfers," Journal of Population Economics, Springer;European Society for Population Economics, vol. 13(1), pages 147-157.
  • Handle: RePEc:spr:jopoec:v:13:y:2000:i:1:p:147-157
    Note: Received: 3 November 1998/Accepted: 4 May 1999
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    Citations

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    Cited by:

    1. Shim, Ilhyock & Sharma, Sunil & Chami, Ralph, 2008. "A Model of the IMF as a Coinsurance Arrangement," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 2, pages 1-41.
    2. Gil Epstein, 2007. "Extremism within the family," Journal of Population Economics, Springer;European Society for Population Economics, vol. 20(3), pages 707-715, July.
    3. Bachmann, Andreas & Boes, Stefan, 2014. "Private transfers and college students’ decision to work," Economics of Education Review, Elsevier, vol. 42(C), pages 34-42.

    More about this item

    Keywords

    Altruism; bequests; gifts;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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