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Economic Growth and Endogenous Intergenerational Altruism

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  • Hillel Rapoport

    () (CREDPR, Department of Economics, Stanford University; CADRE; and Bar-Ilan University)

  • Jean-Pierre Vidal

    (European Central Bank)

Abstract

The recent literature on the endogenous formation of preferences has emphasized that while some preferences are more conducive to growth than others, economic growth also contributes to the formation of particular tastes (Becker, 1996). In this paper, we construct a neoclassical growth model where intergenerational altruism is endogenous and entails costly sacrifices on the part of parents to acquire such trait. While the acquisition of altruistic traits depends on the economic conditions, altruism determines the level of intergenerational bequests and ultimately the accumulation of physical capital and economic growth. We derive three main results from this general equilibrium framework. First, we show that individuals accumulate altruism in the long run whenever the ‘marginal degree of altruism’ is sufficiently high. Second, we find that the endogenous formation of altruism is more likely to occur at later stages of economic growth. Finally, we show that low interest rates are correlated with altruistic behavior; this is in contrast to previous research in a partial equilibrium framework (Mulligan, 1997).

Suggested Citation

  • Hillel Rapoport & Jean-Pierre Vidal, 2003. "Economic Growth and Endogenous Intergenerational Altruism," Working Papers 2003-04, Bar-Ilan University, Department of Economics.
  • Handle: RePEc:biu:wpaper:2003-04
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Oded Galor & Ömer Özak, 2016. "The Agricultural Origins of Time Preference," American Economic Review, American Economic Association, vol. 106(10), pages 3064-3103, October.
    2. Armellini, Mauricio & Basu, Parantap, 2010. "Altrusim. Education Subsidy and Growth," MPRA Paper 23653, University Library of Munich, Germany.
    3. repec:ipg:wpaper:2013-013 is not listed on IDEAS
    4. Kunze, Lars, 2012. "Like Father, Like Son: Inheriting and Bequeathing," Ruhr Economic Papers 318, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    5. Lars Kunze, 2012. "Like Father, Like Son: Inheriting and Bequeathing," Ruhr Economic Papers 0318, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    6. Juan Mora & Ana Moro-Egido, 2012. "Analyzing motives for money-transfers within families: the role of transfers for education," Empirical Economics, Springer, vol. 43(1), pages 357-378, August.
    7. Chen, Hung-Ju & Sultana, Rezina, 2013. "Job Reservation and Intergenerational Transmission of Preferences," MPRA Paper 45036, University Library of Munich, Germany.
    8. Guillaume Daudin & Raphaël Franck & Hillel Rapoport, 2016. "The Cultural Diffusion of the Fertility Transition: Evidence from Internal Migration in 19th Century France," Working Papers hal-01308354, HAL.
    9. Pierre Pestieau & Emmanuel Thibault, 2012. "Love thy children or money," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(1), pages 31-57, May.
    10. repec:zbw:rwirep:0318 is not listed on IDEAS
    11. Guillaume Daudin & Raphaël Franck & Hillel Rapoport, 2016. "The cultural diffusion of the fertility transition: evidence from internal migration in 19 th century France," Working Papers halshs-01321952, HAL.
    12. repec:ipg:wpaper:13 is not listed on IDEAS
    13. Immordino, Giovanni & Padula, Mario, 2013. "Expropriation risk and discounting," Research in Economics, Elsevier, vol. 67(2), pages 145-156.
    14. Schumacher, Ingmar, 2015. "The endogenous formation of an environmental culture," European Economic Review, Elsevier, vol. 76(C), pages 200-221.
    15. Emmanuel Thibault, 2008. "Dynamic efficiency and intergenerational altruism," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(3), pages 679-687, July.
    16. repec:hal:cesptp:halshs-01321952 is not listed on IDEAS

    More about this item

    Keywords

    Altruism; Economic Growth;

    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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