Abstract
ABSTRACT Considering a bargaining equilibrium of intergenerational exchange within a family, we study the effects of an increase in the bargaining power of children on the fertility rate, informal long-term care provision, and intergenerational transfers within the family. Most economically developed countries have experienced both fertility rate decline and life longevity extension in the last several decades. Under such circumstances, the bargaining power of each child apparently becomes greater if needs for elderly long-term care do not decrease. We demonstrate that, in a family bargaining equilibrium, a higher bargaining weight of a child results in fewer children and greater intergenerational transfer from the parent, although the family long-term care level remains unchanged for a given wage rate.
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