Altruism and efficient allocations in three-generation households

Journal of Development Economics, 2017

In this paper, we investigate the link between intra-household resource allocation and familial ties between household members. We show that, within the same geographic, economic and social environments, households where members have 'stronger' familial ties (e.g. a nuclear family household) achieve near Pareto efficient allocation of productive resources and Pareto efficient allocation of consumption while households with 'weaker' familial ties (e.g. an extended family household) do not. We propose a theoretical model of the household based on the idea that altruism between household members vary with familial ties which generates predictions consistent with the observed empirical patterns.

Journal of European Social Policy, 2007

The ‘generational contract’ is the most important and also the most contentious dimension of contemporary welfare systems. Much of the debate on how to reform it is still truncated, however, by focusing on its public dimension only, especially on pensions and health-care provisions. For a full account, the transfer of resources between adult generations in the family needs to be included as well. So far, research on family transfers has almost exclusively been limited to single-country studies. In this article, we present a comparative study of financial transfers and social support in ten Western European countries based on the Survey of Health, Ageing and Retirement in Europe (SHARE) conducted in 2004. Our results confirm, at the European level, the existence of a common transfer pattern. There is a net downward flow from the older to the younger generations, both by inter vivos financial transfers and by social support. Transfers from the elderly parents to their children are much more frequent and also usually much more intense than those in the opposite direction. The positive balance decreases with age but even those over the age of 70 clearly remain net givers. Our results also demonstrate that country-specific transfer patterns follow the typology of welfare regimes. Transfers from parents to children are less frequent but more intense in the Southern European countries than in the Nordic ones, with the Continental European countries being somewhere in between the two. This welfare regime effect still holds after controlling for the most relevant characteristics of the parents.

Tijdschrift voor Sociale en Economische Geschiedenis/ The Low Countries Journal of Social and Economic History

Using a unique database containing detailed household information of more than 30,000 Dutch children (1850-1909), we compare infant and child mortality in the 'stem family' region of Eastern Netherlands to mortality in the 'nuclear family' northwestern part of the country. We elaborate on the relation between household structure and mortality by adapting the model proposed by Mosley and Chen. We study the impact of different types of co-resident kin (grandparents, siblings, uncles and aunts) in 'normal' situations (both parents alive) and 'crisis' situations (one or both parents absent). Our findings confirm that intact three-generation families-which were found mainly in the stem region-were beneficial for young children, provided there were not too many young children. In the nuclear area, co-residence with grandparents was an efficient way to counteract family crises. In the stem family region, this 'safety valve' function of households was less conspicuous. Overall, however, kin functioned in the same way in both regions, with some kin (especially grandparents) playing an altruistic role, having a positive effect on child survival, and other kin competing for resources and diminishing the survival chances of infants and children. 1. Frans van Poppel, 'Children in one-parent families: Survival as an indicator of the role of the parents',

2005

1988

In recent years Robert ingenious model of intergenerational altruism has taken its place among the major theories of consumption and saving. Despite its policy importance, there have been few direct tests of the Barro model. This paper presents a new direct test that is based on a property of the Barro model that, to our knowledge, has not previously been exploited. This property is that the Euler errors (i.e., disturbances in the Euler equations) of altruistically linked members of Barro extended families (clans) are identical. Under time-separable, homothetic utility, this equality of Euler errors means that, controlling for clan preferences about the age distribution of consumptiorr, the percentage changes over time in consumption of all Barro clan members are equal. With some weak additional assumptions, this proposition implies that the average percentage change in household consumption within an age cohort should be the same for all age cohorts. Testing the Barro model by comparing average percentage changes in consumption across age cohorts is particularly advantageous because it is nonparametric; in determining whether the average consumptions of different age cohorts move together we place no restrictions on preferences beyond the assumptions of homotheticity and time separability. In particular, each Barro clan can have quite different preference parameters. The new quarterly Consumer Expenditure Surveys (CES) covering 1980 through the-first quarter of 1985 are an excellent data set for determining whether the consumption of different age groups moves together. The CES records the consumption of each sample household for-up to four quarters, and thus can be used to determine the average quarterly percentage change in consumption of households in a given age group. The null hypothesis of our test is that cohort differences in the average percentage change in consumption are due simply to sampling and measurement error. Alternative hypotheses, suggested by the Life Cycle Model, are that (1) the percentage changes in the average consumptions of any two cohorts are more highly correlated the closer in age are the two cohorts, and (2) the variance in the percentage change in consumption is a monotone function of the age of the cohort. The data fail to reject the null hypothesis of equal Euler errors. Indeed, the results provide fairly strong support for the intergenerational altruism model as opposed to the Life Cycle Model.

Research on aging, 2015

The availability of social and financial resources has profound implications for health and well-being in later life. Older adults often share resources with others who live with them, sometimes in households including relatives or friends. We examine differences in social support, social connections, money, and the household environment across types of living arrangements, develop hypotheses from two theoretical perspectives, one focusing on obligations toward kin, and one focused on social exchange within households, and test them using data from the National Social Life, Health, and Aging Project. We find that availability of resources is not consistently associated with the presence of grandchildren and other young relatives, but often differs with presence of other adults. These findings suggest that a single type of resource tells us little about the distribution of the resources of older adults, and call on us to examine multiple resources simultaneously.

Journal of Mathematical Economics, 2014

SSRN Electronic Journal, 2010

Many economic analyses of public policy issues are based upon the life-cycle model of household behavior. The usual formulation omits private intergenerational transfers. This paper considers the possibility of a more sophisticated formulation that includes the latter. We examine 1992-2008 HRS data on inheritances and inter vivos gifts. We uncover an underreporting problem in the data: a household's financial respondent often seems to understate transfers from his/her in-laws. Nevertheless, other aspects of the data seem very useful. About 30-40 percent of households eventually inherit. Inheritances seem to reflect a mixture of intentional and accidental bequests, with the latter twice as prevalent.

We report on a new diary based expenditure survey that for the …rst time collects direct information on the allocation of all expenditures to di¤erent members of the household. The most important …nding from the survey is that the mean share that wives have of all expenditures that are assignable to husband or wife is well determined and very close to one half. Despite this equality at the mean, there is considerable dispersion across the population and in half of households one partner receives twice as much (or more) as the other. Moreover, these expenditures comprise a sizable part of the household budget. For example, the mean joint expenditure by husbands and wives on their own private, assignable goods accounts for 11% of disposable income. The main observable determinants of the variation in sharing expenditures across couples are a mixture of variables found in previous studies and variables that have not been considered before. As regards the former, we …nd that wives in higher educated and/or higher income households have a higher expenditure share. The other familiar e¤ect The collection of the survey information used in this paper was funded by the Danish SSF project "Intra-family Allocation of Resources in Denmark", 24-00-0212. We are very grateful for this funding. We also thank the Danish National Research Council for support through its grant to CAM.

European Sociological Review, 2019

We analyse intergenerational solidarity within multigenerational households (MGHs) and assess how the formation of these households is related to poverty across European countries. Our aim is to assess how this type of household is a coping strategy with respect to financial distress for families with children. Using data from EU Statistics on Income and Living Conditions (EU-SILC), we examine three specific empirical questions with regards to this complex form of intergenerational solidarity, notably (i) we identify to what extent co-residence within MGHs is financially beneficial to the young and/or the old generation; (ii) we analyse how the income brought into these households by the old generation impacts on child poverty, and (iii) we test how sensitive this impact is to hypotheses about the way resources are shared in the household. We define MGHs as those households where three generations cohabit. The results indicate that the formation of MGH operates mainly as solidarity ...