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Parental altruism under imperfect information: Theory and evidence
Villanueva, Ernesto
Universitat Pompeu Fabra. Departament d'Economia i Empresa
Can we reconcile the predictions of the altruism model of the familywith the evidence on intervivos transfers in the US? This paper expandsthe altruism model by introducing e ?ort of the child and by relaxingthe assumption of perfect information of the parent about the labormarket opportunities of the child. First, I solve and simulate a modelof altruism under imperfect information. Second, I use cross-sectionaldata to test a prediction of the model: Are parental transfers especiallyresponsive to the income variations of children who are very attached tothe labor market? The results suggest that imperfect information accountsfor several patterns of intergenerational transfers in the US.
Labour, Public, Development and Health Economics
imperfect information
intervivos transfers
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