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The Effects of Inter‐Generational Transfers on the Marital Surplus
Author(s) -
Andaluz Joaquín,
Marcén Miriam,
Molina José Alberto
Publication year - 2017
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/manc.12148
Subject(s) - economics , incentive , demographic economics , labour economics , transfer (computing) , economic surplus , microeconomics , welfare , market economy , parallel computing , computer science
This paper explores the impact of inter‐generational transfers on the marital surplus, measured as the difference between the utility level in marriage and in divorce. To that end, we consider a three‐generation family playing a two‐stage sequential game. In this framework, we find conditions under which an increase in inter‐generational transfers leads to a decrease in the marital surplus, which may reduce the incentives of parents to donate income to their married children. Supplemental analysis, developed to study whether inter‐generational transfers are crowded out by public transfers, suggests that altruistically‐motivated inter‐generational transfers are not always displaced by public transfers, especially when parents are highly altruistic.