Cremer, Helmuth and Roeder, Kerstin (2017) Rotten spouses, family transfers and public goods. Journal of Population Economics, 30. pp. 141-161.

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Identification Number : 10.1007/s00148-015-0564-x


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).

Item Type: Article
Language: English
Date: 2017
Refereed: Yes
Uncontrolled Keywords: rotten kids, altruism, private provision of public good, subgame perfect equilibrium, family aid
JEL Classification: D13 - Household Production and Intrahousehold Allocation
D61 - Allocative Efficiency; Cost-Benefit Analysis
D64 - Altruism
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 19 Apr 2016 12:21
Last Modified: 02 Apr 2021 15:52
OAI Identifier:

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