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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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  1. Becker, Gary S, 1981. "Altruism in the Family and Selfishness in the Market Place," Economica, London School of Economics and Political Science, vol. 48(189), pages 1-15, February.
  2. 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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  7. 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.
  8. Donald Cox & Zekeriya Eser & Emmanuel Jimenez, 1996. "Motives for Private Transfers over the Life Cycle: An Analytical Framework and Evidence for Peru," Boston College Working Papers in Economics 327., Boston College Department of Economics.
  9. Guiso, Luigi & Jappelli, Tullio, 1998. "Private Transfers, Borrowing Constraints and the Timing of Homeownership," CEPR Discussion Papers 2050, C.E.P.R. Discussion Papers.
  10. Cox, Donald, 1990. "Intergenerational Transfers and Liquidity Constraints," The Quarterly Journal of Economics, MIT Press, vol. 105(1), pages 187-217, February.
  11. Arrondel, Luc & Laferrere, Anne, 2001. "Taxation and wealth transmission in France," Journal of Public Economics, Elsevier, vol. 79(1), pages 3-33, January.
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  16. 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.
  17. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  18. Lundberg, Shelly & Pollak, Robert A, 1994. "Noncooperative Bargaining Models of Marriage," American Economic Review, American Economic Association, vol. 84(2), pages 132-37, May.
  19. 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.
  20. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
  21. Arrondel, L. & Masson, A., 1999. "Family Transfers Involving Three Generations," DELTA Working Papers 1999-16, DELTA (Ecole normale supérieure).
  22. Shelly Lundberg & Robert A. Pollak, 2007. "The American Family and Family Economics," NBER Working Papers 12908, National Bureau of Economic Research, Inc.
  23. Imran Rasul, 2006. "The Economics of Child Custody," Economica, London School of Economics and Political Science, vol. 73(289), pages 1-25, 02.
  24. Chami, Ralph & Fischer, Jeffrey H., 2000. "Do private income transfers increase labor market risk?," Economics Letters, Elsevier, vol. 69(2), pages 143-151, November.
  25. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
  26. Suen, Wing & Chan, William & Zhang, Junsen, 2003. "Marital transfer and intra-household allocation: a Nash-bargaining analysis," Journal of Economic Behavior & Organization, Elsevier, vol. 52(1), pages 133-146, September.
  27. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  28. Ernesto Villanueva, 2005. "Inter vivos transfers and bequests in three OECD countries," Economic Policy, CEPR;CES;MSH, vol. 20(43), pages 505-565, 07.
  29. Bergstrom, Theodore C, 1999. " Systems of Benevolent Utility Functions," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(1), pages 71-100.
  30. Chiappori, P.A., 1989. "Collective Labour Supply and Welfare," DELTA Working Papers 89-07, DELTA (Ecole normale supérieure).
  31. 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.
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