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Parental altruism under imperfect information: theory and evidence

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  • Ernesto Villanueva

Abstract

Understanding if altruism motivates intergenerational monetary transfers is crucial to assess the effectiveness of public policies that redistribute income across generations. Previous works have rejected the altruism hypothesis. This paper presents an altruism model that incorporates effort of the child and introduces imperfect information of parents about the labor market opportunities of children. Calibrations of the model show that the response of transfers to the income of the child is similar to the estimates of previous researchers. I also find evidence supporting a prediction of the model: parental transfers are especially responsive to income variations of children who are very attached to the labor market.

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  • Ernesto Villanueva, 2003. "Parental altruism under imperfect information: theory and evidence," Working Papers 19, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:19
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    Cited by:

    1. 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.
    2. Fernandes, A., 2000. "Altruism with Endogenous Labor Supply," Papers 0002, Centro de Estudios Monetarios Y Financieros-.
    3. Altonji Joseph G & Villanueva Ernesto, 2007. "The Marginal Propensity to Spend on Adult Children," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-52, February.
    4. John K. Pattison‐Williams & Philippe Marcoul & Sandeep Mohapatra, 2023. "Intrahousehold moral hazard frictions and household poverty traps in rural India," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(1), pages 67-96, January.
    5. Jellal, Mohamed, 2014. "A theory of family education incentives and inequality," MPRA Paper 57913, University Library of Munich, Germany.
    6. Robert Grafstein, 2015. "Public pensions and the intergenerational politics of aging societies," Journal of Theoretical Politics, , vol. 27(3), pages 457-484, July.
    7. Javier OLIVERA ANGULO, 2011. "The division of parental transfers in Europe," Working Papers of Department of Economics, Leuven ces11.20, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    8. Yang-Ming Chang, 2009. "Strategic altruistic transfers and rent seeking within the family," Journal of Population Economics, Springer;European Society for Population Economics, vol. 22(4), pages 1081-1098, October.
    9. Jellal, Mohamed, 2009. "A Theory of Educational Inequality Family and Agency Costs," MPRA Paper 17434, University Library of Munich, Germany.
    10. Rob Alessie & Viola Angelini & Giacomo Pasini, 2014. "Is It True Love? Altruism Versus Exchange in Time and Money Transfers," De Economist, Springer, vol. 162(2), pages 193-213, June.
    11. Fernanda Mazzotta & Lavinia Parisi, 2020. "Money and time: what would you give back to me? Reciprocity between children and their elderly parents in Europe," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(3), pages 941-969, October.
    12. Elin Halvorsen & Thor O. Thoresen, 2011. "Parents' Desire to Make Equal Inter Vivos Transfers," CESifo Economic Studies, CESifo Group, vol. 57(1), pages 121-155, March.
    13. Jellal, Mohamed & Wolff, François Charles, 2003. "Leaving home as a self-selection device," MPRA Paper 38528, University Library of Munich, Germany.
    14. 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.
    15. Ayşegül Şahin, 2004. "The incentive effects of higher education subsidies on student effort," Staff Reports 192, Federal Reserve Bank of New York.
    16. Jellal, Mohamed, 2009. "Family Capitalism Corporate Governance Theory," MPRA Paper 17886, University Library of Munich, Germany.

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    More about this item

    Keywords

    Altruism; imperfect information; intervivos transfers;
    All these keywords.

    JEL classification:

    • D19 - Microeconomics - - Household Behavior - - - Other
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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