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Who Cares for the Elderly? Intrafamily Resource Allocation and Migration in Mexico

  • Francisca Antman

    ()

    (Department of Economics, Stanford University)

Children are sometimes viewed as a method of insuring against disability and providing income after retirement, especially in developing countries with limited markets for credit and insurance. But how do children decide on how much care to provide to their parents in old age, particularly in families with many children? This paper takes a non-cooperative view of family decision-making and estimates best response functions for individual physical and financial contributions as a function of siblings' contributions. I account for the endogeneity of siblings' contributions by using siblings' characteristics as instrumental variables. By estimating these decisions as part of a two-stage game that includes a migration decision, I also consider the impact of migration on elderly care. I find evidence that children's financial contributions function as strategic complements while their time contributions operate as strategic substitutes, suggesting that giving may be based on both strategic bequest and public good motivations. Despite these findings, evidence from a simulation generating an exogenous switch in child's migrant status shows a likely decrease in time and financial contributions for most elderly parents.

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Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 06-031.

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Date of creation: Jan 2007
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Handle: RePEc:sip:dpaper:06-031
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  1. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-85, May.
  2. Zhiqi Chen & Frances Woolley, 1999. "A Cournot-Nash Model of Family Decision Making," Carleton Economic Papers 99-13, Carleton University, Department of Economics, revised Oct 2001.
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  5. Shleifer, Andrei & Summers, Lawrence H. & Bernheim, B. Douglas, 1986. "The Strategic Bequest Motive," Scholarly Articles 3721794, Harvard University Department of Economics.
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  7. Audrey Light & Kathleen McGarry, 2004. "Why Parents Play Favorites: Explanations for Unequal Bequests," American Economic Review, American Economic Association, vol. 94(5), pages 1669-1681, December.
  8. Tennille J. Checkovich & Steven Stern, 2002. "Shared Caregiving Responsibilities of Adult Siblings with Elderly Parents," Journal of Human Resources, University of Wisconsin Press, vol. 37(3), pages 441-478.
  9. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-18, October.
  10. Steven Stern & Bridget Hiedemann, 1999. "Strategic Play Among Family Members When Making Long-Term Care Decisions," Virginia Economics Online Papers 321, University of Virginia, Department of Economics.
  11. Midori Wakabayashi & Charles Yuji Horioka, 2006. "Is the Eldest Son Different? The Residential Choice of Siblings in Japan," ISER Discussion Paper 0674, Institute of Social and Economic Research, Osaka University.
  12. Pezzin, Liliana E & Schone, Barbara Steinberg, 1997. "The Allocation of Resources in Intergenerational Households: Adult Children and Their Elderly Parents," American Economic Review, American Economic Association, vol. 87(2), pages 460-64, May.
  13. Sandler, Todd & Murdoch, James C, 1990. "Nash-Cournot or Lindahl Behavior? An Empirical Test for the NATO Allies," The Quarterly Journal of Economics, MIT Press, vol. 105(4), pages 875-94, November.
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  15. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November.
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