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Parental altruism under imperfect information: Theory and evidence

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  • Ernesto Villanueva

Abstract

Can we reconcile the predictions of the altruism model of the family with the evidence on intervivos transfers in the US? This paper expands the altruism model by introducing e ?ort of the child and by relaxing the assumption of perfect information of the parent about the labor market opportunities of the child. First, I solve and simulate a model of altruism under imperfect information. Second, I use cross-sectional data to test a prediction of the model: Are parental transfers especially responsive to the income variations of children who are very attached to the labor market? The results suggest that imperfect information accounts for several patterns of intergenerational transfers in the US.

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  • Ernesto Villanueva, 2002. "Parental altruism under imperfect information: Theory and evidence," Economics Working Papers 650, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:650
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    Cited by:

    1. 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.
    2. 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.
    3. Jellal, Mohamed & Wolff, François Charles, 2003. "Leaving home as a self-selection device," MPRA Paper 38528, University Library of Munich, Germany.
    4. 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.
    5. 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.
    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. 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.
    9. 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.
    10. Jellal, Mohamed, 2009. "Family Capitalism Corporate Governance Theory," MPRA Paper 17886, University Library of Munich, Germany.
    11. 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.
    12. Fernandes, A., 2000. "Altruism with Endogenous Labor Supply," Papers 0002, Centro de Estudios Monetarios Y Financieros-.
    13. Jellal, Mohamed, 2014. "A theory of family education incentives and inequality," MPRA Paper 57913, University Library of Munich, Germany.
    14. 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.
    15. Jellal, Mohamed, 2009. "A Theory of Educational Inequality Family and Agency Costs," MPRA Paper 17434, University Library of Munich, Germany.
    16. Ayşegül Şahin, 2004. "The incentive effects of higher education subsidies on student effort," Staff Reports 192, Federal Reserve Bank of New York.

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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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