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Parental altruism under imperfect information: theory and evidence

  • Ernesto Villanueva

Understanding if altruism motivates intergenerational monetary transfers is crucial to assess the effectiveness of public policies that redistribute income across generations. Previous works have rejected the altruism hypothesis. This paper presents an altruism model that incorporates effort of the child and introduces imperfect information of parents about the labor market opportunities of children. Calibrations of the model show that the response of transfers to the income of the child is similar to the estimates of previous researchers. I also find evidence supporting a prediction of the model: parental transfers are especially responsive to income variations of children who are very attached to the labor market.

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Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 19.

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Date of creation: Dec 2003
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Handle: RePEc:bge:wpaper:19
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