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Income Transfers, Welfare and Family Decisions

  • Andaluz, Joaquín

    ()

    (University of Zaragoza)

  • Marcén, Miriam

    ()

    (University of Zaragoza)

  • Molina, José Alberto

    ()

    (University of Zaragoza)

This paper studies the effects of different income transfers on individual welfare, in both marriage and divorce situations, and on family decisions. We assume three generations within the family. We develop a sequential game that, in a first stage, determines the optimum level of the transfer within a relationship of one-sided altruism. In the second stage, the level of welfare is deduced by way of a Nash bargaining solution. We show that inter-generational transfers may produce losses derived from the marriage. We have also found that the donor of an intergenerational transfer can behave in a compensatory way in an altruism model.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2804.

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Length: 23 pages
Date of creation: May 2007
Date of revision:
Handle: RePEc:iza:izadps:dp2804
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  17. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-67, June.
  18. McElroy, Marjorie B & Horney, Mary Jean, 1981. "Nash-Bargained Household Decisions: Toward a Generalization of the Theory of Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 333-49, June.
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  22. Andaluz, Joaquin & Molina, Jose Alberto, 2007. "How do altruistic parental transfers affect the welfare gains of marriage?," Research in Economics, Elsevier, vol. 61(1), pages 1-9, March.
  23. Chen, Zhiqi & Woolley, Frances, 2001. "A Cournot-Nash Model of Family Decision Making," Economic Journal, Royal Economic Society, vol. 111(474), pages 722-48, October.
  24. Kang, Sung Jin & Lee, Myoung-jae, 2003. "Analysis of private transfers with panel fixed-effect censored model estimator," Economics Letters, Elsevier, vol. 80(2), pages 233-237, August.
  25. Lundberg, S. & Pollak, R.A., 1991. "Separate Spheres Bargaining and the Marriage Market," Discussion Papers in Economics at the University of Washington 91-08, Department of Economics at the University of Washington.
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  28. William G. Gale & John Karl Scholz, 1991. "Intergenerational Transfers and the Accumulation of Wealth," UCLA Economics Working Papers 624, UCLA Department of Economics.
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  31. Laurence J. Kotlikoff & Lawrence H. Summers, 1980. "The Role of Intergenerational Transfers in Aggregate Capital Accumulation," NBER Working Papers 0445, National Bureau of Economic Research, Inc.
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