Of rotten kids and Rawlsian parents: The optimal timing of intergenerational transfers |
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Authors: | Hendrik Jürges |
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Institution: | (1) Department of Economics, University of Dortmund, D-44221 Dortmund, Germany (Fax: +49-231-755-5404; e-mail: hendrik.juerges@wiso.uni-dortmund.de), DE |
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Abstract: | This paper shows that altruistic parents with utilitarian preferences may fare better if they transfer resources to their children early in life instead of delaying the bulk of transfers
until after their death. Moreover, the outcome of the analysed “family transfer game” is not Pareto-efficient in the case
of bequests. However, if altruistic parents hold Rawlsian preferences, they will be indifferent between gifts and bequests, and Pareto-efficiency is always obtained. In intermediate
cases of Atkinson-type welfare functions, welfare losses of bequests compared to gifts disappear as the aversion to inequality
converges to infinity.
Received: 3 November 1998/Accepted: 4 May 1999 |
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Keywords: | JEL classification: D61 D64 J22 |
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