Family Institution and Filial Attention Contract
In this paper, we examine the pure exchange motive for intergenerational transfers within the family. We consider a model where a selfish parent offers a financial transfer in exchange for the services of the child. Using a Stackelberg game, we study the optimal attention-money contract between the generations. We prove that the amount of gift received may be either positively or negatively related with the child's income. In addition, the relationship between the two variables is non linear and affected by the parent's degree of risk aversion. This nonlinearity, which has been largely neglected to date in empirical analyses, may explain why the exchange transfer motive has received little support in developed countries.
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