RT Journal Article
SR 00
ID 10.1007/s00148-015-0564-x
A1 Cremer, Helmuth
A1 Roeder, Kerstin
T1 Rotten spouses, family transfers and public goods
JF Journal of Population Economics
YR 2017
FD 2017
VO 30
SP 141
OP 161
K1 rotten kids
K1 altruism
K1 private provision of public good
K1 subgame perfect equilibrium
K1 family aid
AB We show that once interfamily exchanges are considered, Becker?s rotten kids mechan- ism has some remarkable implications that have gone hitherto unnoticed. Specifically, we establish that Cornes and Silva's (1999) result of e¢fficiency in the contribution game amongst siblings extends to a setting where the contributors (spouses) belong to different families. More strikingly still, the mechanism does not just have consequences for efficiency but it may have dramatic redistributive implications. In particular, we show that the rotten kids mechanism combined with a contribution game to a house- hold public good may lead to an astonishing equalization of consumptions between the spouses and their parents, even when their parents'wealth levels differ. We consider two families, each consisting of a parent and an adult child, who are "linked"by the young spouses. Children contribute part of their time to a household (couple) public good and provide attention to their respective parents"in exchange"for a bequest. Spouses behave towards their respective parents like Becker's rotten kids; they are purely selfish and anticipate that their altruistic parents will leave them a bequest. The most striking results obtain when wages are equal and when parents'initial wealth levels are not too different. For very large wealth differences the mechanism must be supplemented by a (mandatory) transfer that brings them back into the relevant range. When wages differ but are similar the outcome will be near efficient (and near egalitarian).
PB Springer
SN 0933-1433
LK https://publications.ut-capitole.fr/id/eprint/20314/
UL http://tse-fr.eu/pub/30378