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研討會總覽

Testing Parental Altruism: A Full Solution to a Dynamic Model of Altruistic Transfers

2020/01/15
  • 研討會日期 : 2020-01-15
  • 時間 : 10:30
  • 主講人 : Ms. Yu-Chi Chu (朱玉琦)
  • 主持人 : Professor Tzu-Ting Yang
  • 地點 : Conference Room B110
  • 演講者簡介 : Ms. Chu will receive her Ph.D. in Economics from University of Wisconsin-Madison in 2020. Her research fields are Macroeconomics, Family Economics, and Monetary Economics. She is applying for a position of the Institute of Economics, Academia Sinica now.
  • 演講摘要 : Are intergenerational transfers from parents to children motivated by altruism or exchange? Previous work does not support the altruism hypothesis. Specifically, empirical studies have tested the required derivative restriction of the altruism model — that redistributing one dollar from a recipient child to donor parents leads to a one-dollar increase in transfers. Many papers have estimated a small increase (less than 13 cents) and thus strongly reject altruism. This paper shows that these empirical findings cannot be deemed as decisive evidence to reject altruism. I achieve this in two steps. First, I revisit the canonical two-period model of altruistic transfers and show that the solution method based on first-order conditions does not always deliver the global maximum. Solving the model globally, I find that there are two transfer regions, distinguished by whether children are constrained in equilibrium. The derivative restriction holds in each region, however, mixing the two leads to biased estimates of the effects of parent and child incomes on transfers. Second, to inspect the scale of such biasedness, I extend the two-period model to a lifecycle economy where parents and children interact until parents die. The model is calibrated to match the key micro moments of the sample of parent-child pairs used to test altruism in Altonji, Hayashi, and Kotlikoff (1997). Using the model simulated panel, I estimate the transfer responses to a one-dollar reduction of child income together with a one-dollar increase of parent income, and find a 18-cents increase in transfers, which is not far away from the empirical estimate. My finding suggests that altruism is still a reasonable candidate to understand intergenerational transfers.