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Endogenous division rules as a family constitution: strategic altruistic transfers and sibling competition

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  • Yang-Ming Chang

    ()

  • Zijun Luo

    ()

Abstract

Based on the notions of parental altruism, sibling competition, and family constitution, we present a self-enforcing model where heterogeneous children have economic incentives to supply family-specific merit goods (e.g., companionship) to their parents for securing inheritable wealth and the altruistic parents decide on division rules according to an optimizing behavior. In our analysis of intergenerational cooperation and intragenerational competition, the altruistic parents care about the efficiency of the children-provided merit goods and the equity of the children’s incomes. For an optimal allocation of wealth, the parents strategically partition it into two pools: one to be distributed equally whereas the other unequally according to their children’s supply of merit goods. We look at motivation of the parents in allocating their wealth to the two different pools. The analysis of endogenous division rules has implications for the compatibility between equal postmortem transfers and unequal inter vivos gifts, both of which are consistent with parental altruism. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Yang-Ming Chang & Zijun Luo, 2015. "Endogenous division rules as a family constitution: strategic altruistic transfers and sibling competition," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(1), pages 173-194, January.
  • Handle: RePEc:spr:jopoec:v:28:y:2015:i:1:p:173-194
    DOI: 10.1007/s00148-013-0501-9
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    Cited by:

    1. repec:eee:hapoch:v1_609 is not listed on IDEAS
    2. Charles Yuji Horioka & Emin Gahramanov & Aziz Hayat & Xueli Tang, 2018. "Why Do Children Take Care Of Their Elderly Parents? Are The Japanese Any Different?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(1), pages 113-136, February.
    3. Alessandro Cigno & Mizuki Komura & Annalisa Luporini, 2017. "Self-enforcing family rules, marriage and the (non)neutrality of public intervention," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(3), pages 805-834, July.
    4. repec:spr:jopoec:v:30:y:2017:i:3:d:10.1007_s00148-017-0635-2 is not listed on IDEAS
    5. repec:kap:pubcho:v:179:y:2019:i:3:d:10.1007_s11127-018-0559-8 is not listed on IDEAS
    6. Justina Klimaviciute & Sergio Perelman & Pierre Pestieau & Jerome Schoenmaeckers, 2017. "Caring for dependent parents: Altruism, exchange or family norm?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(3), pages 835-873, July.
    7. Junya Hamaaki & Masahiro Hori & Keiko Murata, 2019. "The intra-family division of bequests and bequest motives: empirical evidence from a survey on Japanese households," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(1), pages 309-346, January.
    8. Martina Kirchberger, 2014. "Preferences over Leisure and Consumption of Siblings and Intra-Household Allocation," Economics Series Working Papers 713, University of Oxford, Department of Economics.
    9. Cigno, A., 2016. "Conflict and Cooperation Within the Family, and Between the State and the Family, in the Provision of Old-Age Security," Handbook of the Economics of Population Aging, Elsevier.
    10. repec:eee:ecolet:v:170:y:2018:i:c:p:63-65 is not listed on IDEAS

    More about this item

    Keywords

    Parental altruism; Endogenous division rules; Sibling competition; Family constitution; D1; D6; C7;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D6 - Microeconomics - - Welfare Economics
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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