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Bequests as a heir ``discipline device''


  • CREMER, H.


This paper develops a model of inter vivos gifts and bequests in a setting of moral hazard and adverse selection. Altruistic parents do not perfectly know how much effort their children make to earn their living nor do they know their true level of ability. Inter vivos gifts take place prior to the realization of the children's earnings whereas at the moment of bequests, parents do observe them. We show that an optimal transfer policy generally uses a mix of inter vivos gifts - deemed as more efficient - and bequests - deemed as more redistributive.
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  • Cremer, H. & Pestieau, P., 1996. "Bequests as a heir ``discipline device''," CORE Discussion Papers RP 1239, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvrp:1239 Note: In : Journal of Population Economics, 9, 405-414, 1996

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    References listed on IDEAS

    1. Cremer, Helmuth & et al, 1996. "Mobility and Redistribution: A Survey," Public Finance = Finances publiques, , vol. 51(3), pages 325-352.
    2. Sinn, Hans-Werner, 1990. "Tax harmonization and tax competition in Europe," European Economic Review, Elsevier, vol. 34(2-3), pages 489-504, May.
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    6. Alesina, Alberto & Perotti, Roberto, 1995. "Taxation and redistribution in an open economy," European Economic Review, Elsevier, vol. 39(5), pages 961-979, May.
    7. Picard Pierre & Gilbert G, 1991. "Incentives and the optimal size of local territories," CEPREMAP Working Papers (Couverture Orange) 9124, CEPREMAP.
    8. David E. Wildasin, 1994. "Income Redistribution and Migration," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 637-656, August.
    9. Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-858, August.
    10. Wildasin, David E, 1992. "Relaxation of Barriers to Factor Mobility and Income Redistribution," Public Finance = Finances publiques, , vol. 47(Supplemen), pages 216-230.
    11. Pauly, Mark V., 1973. "Income redistribution as a local public good," Journal of Public Economics, Elsevier, vol. 2(1), pages 35-58, February.
    12. MICHEL, Philippe & PESTIEAU, Pierre & VIDAL, Jean-Pierre, 1995. "Labor Mobility and Redistribution with Evolving Altruism : The Small Economy Case," CORE Discussion Papers 1995059, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Cited by:

    1. repec:eee:hapoch:v1_609 is not listed on IDEAS
    2. Wolff, Francois-Charles, 2006. "Microeconomic models of family transfers," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
    3. Stefan Hochguertel & Henry Ohlsson, 2009. "Compensatory inter vivos gifts," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(6), pages 993-1023.
    4. Helmuth Cremer & Pierre Pestieau, 2011. "The Tax Treatment of Intergenerational Wealth Transfers ," CESifo Economic Studies, CESifo, vol. 57(2), pages 365-401, June.
    5. Marta Melguizo Garde, 2007. "La motivación de las transmisiones lucrativas entre generaciones de una familia: modelos teóricos y evidencia empírica," Hacienda Pública Española, IEF, vol. 181(2), pages 81-118, June.
    6. OLIVERA Javier, 2016. "The division of inter-vivos parental transfers in Europe," LISER Working Paper Series 2016-06, LISER.
    7. Helmuth Cremer & ) & Pierre Pestieau, 2003. "Wealth Transfer Taxation: A Survey," Public Economics 0311003, EconWPA.
    8. Alessandro Balestrino, 2000. "Gifts, Lies and Bequests," CHILD Working Papers wp01_00, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
    9. Mohamed Jellal & FranÁois-Charles Wolff, 2003. "Leaving Home as a Self-selection Device," Economica, London School of Economics and Political Science, vol. 70(279), pages 423-438, August.
    10. repec:red:issued:14-279 is not listed on IDEAS
    11. Ralph Chami & Connel Fullenkamp & Samir Jahjah, 2005. "Are Immigrant Remittance Flows a Source of Capital for Development?," IMF Staff Papers, Palgrave Macmillan, vol. 52(1), pages 55-81, April.
    12. Lundholm, Michael & Ohlsson, Henry, 2000. "Post mortem reputation, compensatory gifts and equal bequests," Economics Letters, Elsevier, vol. 68(2), pages 165-171, August.
    13. 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.
    14. Assar Lindbeck & Sten Nyberg, 2006. "Raising Children to Work Hard: Altruism, Work Norms, and Social Insurance," The Quarterly Journal of Economics, Oxford University Press, vol. 121(4), pages 1473-1503.
    15. repec:eee:joecag:v:9:y:2017:i:c:p:41-51 is not listed on IDEAS
    16. Katarina Nordblom & Henry Ohlsson, 2011. "Bequests, gifts, and education: links between intergenerational transfers," Empirical Economics, Springer, vol. 40(2), pages 343-358, April.
    17. Jellal, Mohamed & Wolff, Francois-Charles, 2007. "Gifts, bequests and family incentives," Economics Letters, Elsevier, vol. 94(3), pages 313-318, March.
    18. Jellal, Mohamed, 2014. "A theory of family education incentives and inequality," MPRA Paper 57913, University Library of Munich, Germany.
    19. Chami, Ralph & Fischer, Jeffrey H., 2000. "Do private income transfers increase labor market risk?," Economics Letters, Elsevier, vol. 69(2), pages 143-151, November.
    20. Jellal, Mohamed, 2009. "A Theory of Educational Inequality Family and Agency Costs," MPRA Paper 17434, University Library of Munich, Germany.
    21. 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.

    More about this item

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth


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