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The economic consequences of mutual help in extended families

Author

Listed:
  • Jean-Marie Baland

    (CRED - Centre de Recherche en Economie du Developpement - Facultés Universitaires Notre Dame de la Paix (FUNDP) - Namur)

  • Isabelle Bonjean
  • Catherine Guirkinger
  • Roberta Ziparo

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales)

Abstract

In the absence of well-developed markets for credit and insurance, extended families play a major role as a traditional system of mutual help. However these arrangements have important consequences on economic choices. In this paper, we use first hand data from Western Cameroon to explore this question. We find that the large majority of transfers follow a given pattern whereby elder siblings support their younger siblings in the early stages of their lives who in turn reciprocate by supporting their elder siblings when they have children. We interpret this pattern as a generalised system of reciprocal credit within the extended family. We propose a simple overlapping generation model to investigate its welfare properties. We then explore the implications of this pattern on labour market outcomes and find evidence of large disincentive effects. This pattern of transfers also implies that younger siblings are more educated but have fewer and less educated children.

Suggested Citation

  • Jean-Marie Baland & Isabelle Bonjean & Catherine Guirkinger & Roberta Ziparo, 2016. "The economic consequences of mutual help in extended families," Post-Print hal-01440288, HAL.
  • Handle: RePEc:hal:journl:hal-01440288
    DOI: 10.1016/j.jdeveco.2016.07.004
    Note: View the original document on HAL open archive server: https://hal-amu.archives-ouvertes.fr/hal-01440288
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Boris Gershman, 2016. "Long-Run Development and the New Cultural Economics," Working Papers 2016-06, American University, Department of Economics.
    2. M. Niaz Asadullah & Zaki Wahhaj, 2019. "Early Marriage, Social Networks and the Transmission of Norms," Economica, London School of Economics and Political Science, vol. 86(344), pages 801-831, October.
    3. Manuela Angelucci & Giacomo De Giorgi & Imran Rasul, 2018. "Consumption and Investment in Resource Pooling Family Networks," Economic Journal, Royal Economic Society, vol. 128(615), pages 2613-2651, November.
    4. Rozenn Hotte & Karine Marazyan, 2017. "Demand for Insurance and Within-Kin-Group Marriage: Evidence from a Western African Country," Working Papers 20170005, UMR Développement et Sociétés, Université Paris 1 Panthéon-Sorbonne, Institut de Recherche pour le Développement.
    5. Emla Fitzsimons & Bansi Malde & Marcos Vera‐Hernández, 2018. "Group Size and the Efficiency of Informal Risk Sharing," Economic Journal, Royal Economic Society, vol. 128(612), pages 575-608, July.
    6. Kazianga, Harounan & Wahhaj, Zaki, 2017. "Intra-household resource allocation and familial ties," Journal of Development Economics, Elsevier, vol. 127(C), pages 109-132.
    7. Battaglia, Marianna & Gulesci, Selim & Madestam, Andreas, 2018. "Repayment Flexibility and Risk Taking: Experimental Evidence from Credit Contracts," CEPR Discussion Papers 13329, C.E.P.R. Discussion Papers.
    8. repec:eee:deveco:v:131:y:2018:i:c:p:123-131 is not listed on IDEAS
    9. Marie Boltz & Karine Marazyan & Paola Villar, 2016. "Income Hiding and Informal Redistribution: A Lab in the Field Experiment in Senegal," PSE Working Papers halshs-01157710, HAL.
    10. Margherita Calderone, 2017. "Are there different spillover effects from cash transfers to men and women? Impacts on investments in education in post-war Uganda," WIDER Working Paper Series 093, World Institute for Development Economic Research (UNU-WIDER).
    11. Alger, Ingela & Weibull, Jörgen W., 2018. "Evolutionary Models of Preference Formation," TSE Working Papers 18-955, Toulouse School of Economics (TSE).
    12. Boltz, Marie & Marazyan, Karine & Villar, Paola, 2019. "Income hiding and informal redistribution: A lab-in-the-field experiment in Senegal," Journal of Development Economics, Elsevier, vol. 137(C), pages 78-92.
    13. Pauline Morault, 2017. "Arranged Marriages under Transferable Utilities," Working Papers halshs-01537971, HAL.
    14. Kazianga, Harounan & Wahhaj, Zaki, 2017. "Intra-household resource allocation and familial ties," Journal of Development Economics, Elsevier, vol. 127(C), pages 109-132.
    15. Kazianga, Harounan & Wahhaj, Zaki, 2015. "Norms of Allocation within Nuclear and Extended-Family Households," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205534, Agricultural and Applied Economics Association.
    16. Di Falco, Salvatore & Feri, Francesco & Pin, Paolo & Vollenweider, Xavier, 2018. "Ties that bind: Network redistributive pressure and economic decisions in village economies," Journal of Development Economics, Elsevier, vol. 131(C), pages 123-131.
    17. repec:eee:deveco:v:140:y:2019:i:c:p:1-11 is not listed on IDEAS
    18. Nathan Fiala, 2017. "Business is Tough, but Family is Worse: Household Bargaining and Investment in Microenterprises in Uganda," Working papers 2017-05, University of Connecticut, Department of Economics.
    19. Jérôme Ballet, 2018. "Anthropology and Economics: The Argument for a Microeconomic Anthropology," Cahiers du GREThA 2018-14, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).

    More about this item

    Keywords

    Africa; Extended families; Mutual help; Solidarity; Transfers;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation

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