Gifts bequests and family incentives

Jellal, Mohamed and wolff, François charles (2007): Gifts bequests and family incentives. Published in: Economics Letters No. 94 (2007) 313–318

Abstract

In this note, we use the theory of incentive contracting to characterize the pattern of financial transfers within the family. Using an altruistic model based on bounded rationality with one parent and two children, we show that the parent may provide a lower gift to the less well-off child, while bequests are always compensatory

• Item Type: MPRA Paper
• Language: English
• Keywords: Family incentives , Gifts; Bequests
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics

References

Anderson, G.M., Tollison, R.D., 1991. A theory of rational childhood. European Journal of Political Economy 7, 199–213.

Behrman, J.R., Rosenzweig, M.R., 2004. Parental allocations to children: new evidence on bequest differences among siblings. Review of Economics and Statistics 86, 637–640.

Bernheim, B.D., Severinov, S., 2003. Bequests as signals: an explanation for the equal division puzzle. Journal of Political Economy 111, 733–764.

Bisin, A., Verdier, T., 2001. The economics of cultural transmission and the dynamics of preferences. Journal of Economic Theory 97, 298–319.

Cox, D., 1987. Motives for private income transfers. Journal of Political Economy 95, 508–546.

Cox, D., Rank, M.R., 1992. Inter-vivos transfers and intergenerational exchange. Review of Economics and Statistics 74, 305–314.

Cremer, H., Pestieau, P., 1996. Bequests as a heir discipline device. Journal of Population Economics 9, 405–414.

Dunn, T.A., Phillips, J.W., 1997. The timing and division of parental transfers to children. Economics Letters 54, 135–138.

Laferrère, A.,Wolff, F.C., 2006. Microeconomic models of family transfers. In: Mercier, J., Ythier, Kolm, S.C. (Eds.), Handbook on the Economics of Giving, Reciprocity and Altruism, North-Holland.

Lundholm, M., Ohlsson, H., 2000. Post mortem reputation, compensatory gifts and equal bequests. Economics Letters 68, 165–171.

McGarry, K., 1999. Inter vivos transfers and intended bequests. Journal of Public Economics 73, 321–351.

McGarry, K., Schoeni, R.F., 1995. Transfer behavior in the Health and Retirement Study. Measurement and the redistribution of resources within the family. Journal of Human Resources 30, S185–S226.

Stark, O., 1998. Equal bequests and parental altruism: compatibility or orthogonality? Economics Letters 60, 167–171.

Wilhelm, M.O., 1996. Bequest behavior and the effect of heir's earnings: testing the altruistic model of bequests. American Economic Review 86, 874–892.