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Paper #566

Parental altruism under imperfect information: Theory and evidence
Ernesto Villanueva
Setembre 2001 (Revisió: Setembre 2002)
Can we reconcile the predictions of the altruism model of the family with the evidence on parental monetary transfers in the US? This paper provides a new assessment of this question. I expand the altruism model by introducing effort 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 and labor supply under imperfect information. Second, I use cross-sectional data to test the following 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 of the analysis suggest that imperfect information accounts for many of the patterns of intergenerational transfers in the US.
Paraules clau:
Altruism, intergenerational transfers, private information
Codis JEL:
J14, H20
Àrea de Recerca:
Economia Laboral, Pública, de Desenvolupament i de la Salut

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