Essays on private transfers within the family.

Abstract

The author presents two self-contained essays that explore various aspects of non-market resource transfers within the family. The first essay is a theoretical piece that examines private transfers as a private provision of a public good game in a household. After showing that in the case of two-sided altruism, one side will usually be in a corner in the transfer decision, the author considers the case of transfers from adult children to their parents. The main innovation of the model is to examine transfers of services as well as money. Results on specialization are obtained in both a Pareto optimizing household and a Nash household. Discussion is offered of the effects of government income redistribution schemes and the role of household size in the crowding out of private transfers. The second essay is empirical and examines resource transfers in the context of Peninsular Malaysia. A probit equation and an ordered probit equation are estimated using the R and 's Malaysian Family Life Survey. A Smith-Blundell exogeneity test is used to test for the possible simultaneity between the choice of transfers and the choice of shared living arrangements. The results of the test suggested that shared living arrangements substitute for inter-household transfers. Finally, the probability of making a transfer is shown to be concave in distance.