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Who Owns Children and Does It Matter?

  • Alice Schoonbroodt
  • Michele Tertilt

In this paper a particular market failure that may lead to inefficiently low equilibrium fertility and therefore to a need for government intervention are analysed. The friction which is investigated is related to the ownership of children. If parents have no claim on their children’s income, then the private benefit from producing a child may be smaller than the social benefit. We present an overlapping-generations (OLG) model with fertility choice and altruism, and model ownership by introducing a minimum constraint on transfers from parents to children.

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Date of creation: Jan 2010
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Handle: RePEc:ess:wpaper:id:2360
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