NDLI: Rotten spouses, family transfers, and public goods

Content Provider	Springer Nature Link
Author	Cremer, Helmuth Roeder, Kerstin
Copyright Year	2015
Abstract	We show that once interfamily exchanges are considered, Becker’s rotten kids mechanism has some remarkable, hitherto unnoticed, implications. Specifically, Cornes and Silva’s (J Polit Econ 107(5):1034–1040, 1999) result of efficiency in the contribution game amongst siblings extends to a setting where the contributors (spouses) belong to different families. More strikingly still, the mechanism may also have dramatic redistributive implications. In particular, we show that the rotten kids mechanism combined with a contribution game to a household public good may lead to an astonishing equalization of consumptions between and within families, even when their parents’ wealth levels differ. 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).
Starting Page	141
Ending Page	161
Page Count	21
File Format	PDF
ISSN	09331433
Journal	Journal of Population Economics
Volume Number	30
Issue Number	1
e-ISSN	14321475
Language	English
Publisher	Springer Berlin Heidelberg
Publisher Date	2015-08-23
Publisher Place	Berlin, Heidelberg
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Rotten kids Altruism Private provision of public good Subgame perfect equilibrium Family aid Population Economics Labor Economics Demography Social Policy
Content Type	Text
Resource Type	Article
Subject	Demography Economics and Econometrics

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