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Family Altruism and Incentives

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  • Roberta Gatti

Abstract

This paper characterizes the pattern of intergenerational transfers that emerges in an altruistic model of the family when children's effort is explicitly made endogenous and parents have imperfect information on the stochastic income realizations of their children. It is shown that, if parents can credibly commit to a pattern of transfers, they will choose not to compensate children in bad outcomes as much as predicted by the standard (no uncertainty, no asymmetric information) dynastic model of the family. In this context, Ricardian equivalence holds whenever non‐negativity constraints are not binding.

Suggested Citation

  • Roberta Gatti, 2005. "Family Altruism and Incentives," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 67-81, March.
    • Handle: RePEc:bla:scandj:v:107:y:2005:i:1:p:67-81
    DOI: 10.1111/j.1467-9442.2005.00395.x
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    Cited by:

    1. Degan, Arianna & Thibault, Emmanuel, 2016. "Dynastic accumulation of wealth," Mathematical Social Sciences, Elsevier, vol. 81(C), pages 66-78.
    2. Schüler, Dana, 2007. "Incentive Effects of Transfers within the Extended Family: The Case of Indonesia," Proceedings of the German Development Economics Conference, Göttingen 2007 29, Verein für Socialpolitik, Research Committee Development Economics.
    3. Erlend E. Bø & Elin Halvorsen & Thor O. Thoresen, 2019. "Heterogeneity of the Carnegie Effect," Journal of Human Resources, University of Wisconsin Press, vol. 54(3), pages 726-759.
    4. Naiditch, Claire & Vranceanu, Radu, 2009. "Migrant wages, remittances and recipient labour supply in a moral hazard model," Economic Systems, Elsevier, vol. 33(1), pages 60-82, March.
    5. Ingela Alger & Jörgen W. Weibull, 2010. "Kinship, Incentives, and Evolution," American Economic Review, American Economic Association, vol. 100(4), pages 1725-1758, September.
    6. Ana Fernandes, 2011. "Altruism, labor supply and redistributive neutrality," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(4), pages 1443-1469, October.
    7. Fernandes, A., 2000. "Altruism with Endogenous Labor Supply," Papers 0002, Centro de Estudios Monetarios Y Financieros-.
    8. Sumit Sarkar & Arundhati Sarkar Bose, 2018. "Partially Altruistic Choice in Presence of Consensus Bias," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 16(3), pages 853-861, September.
    9. Jellal, Mohamed, 2009. "A Theory of Educational Inequality Family and Agency Costs," MPRA Paper 17434, University Library of Munich, Germany.
    10. Leonardo Bursztyn & Lucas C. Coffman, 2012. "The Schooling Decision: Family Preferences, Intergenerational Conflict, and Moral Hazard in the Brazilian Favelas," Journal of Political Economy, University of Chicago Press, vol. 120(3), pages 359-397.
    11. Gradstein, Mark, 2008. "Endogenous Reversals of Fortune," IZA Discussion Papers 3469, Institute of Labor Economics (IZA).
    12. Franziska Ziegelmeyer, 2010. "Elterliche Stellvertreterentscheidungen und frühkindliche Humankapitalbildung," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 79(3), pages 57-77.
    13. François-Charles Wolff, 2006. "Parental transfers and the labor supply of children," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(4), pages 853-877, October.
    14. James Berry, 2015. "Child Control in Education Decisions: An Evaluation of Targeted Incentives to Learn in India," Journal of Human Resources, University of Wisconsin Press, vol. 50(4), pages 1051-1080.

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