Intra-household Transfers Research Articles

SOCIOECONOMIC IMPACT OF THE COVID-19 PANDEMIC AND OF THE RESPONSE POLICY IN MOLDOVA: AN INTERGENERATIONAL PERSPECTIVE BASED ON THE COMPUTABLE GENERAL EQUILIBRIUM MODEL

The author employs a Computable General Equilibrium (CGE) model calibrated on a Social Accounting Matrix for the Moldovan economy and enhanced with demographic details to answer three questions: 1) what has been the short-term socioeconomic impact of COVID-19, including the distributional ones from the gender and age perspective? 2) how likely were the 2020 policy measures to provide an adequate immediate response to the crisis? and 3) would there exist an alternative, more optimal policy? According to the CGE-based simulation results, cumulative effect of the COVID-19 economic shocks represents around 11% of the Moldovan GDP. All economic sectors are predicted to decline, with transport, HORECA and services to population sectors suffering the heaviest contractions. Transport sector employs predominantly mid-aged men, while the latter two typically employ women. Age- and sex-structure of employment by sectors explain why men aged 25-34 and women aged 15-24 suffer the largest reduction of their wage income (around 10%). Reflecting the income contraction of the breadwinning age categories and reduction in intra-household transfers, children’ consumption declines accordingly. The older generations relying on public pensions are relatively better sheltered against the COVID-19 socioeconomic effects, as pensions remain rather stable. The analysis suggests that the package of measures adopted by Moldovan government has had minor impact, with VAT reduction to HORECA sector having smaller compensatory effect compared to direct payments to infected doctors and labor-related subsidies. A combination of fiscal and structural measures would have provided a socially fairer and economically more efficient response to the crisis.

Jacob Mincer Award

Jacob Mincer Award

Mobile Money and the Impact of Mobile Phone Regulatory Enforcement Among the Urban Poor in Tanzania

Mobile money provides a tool for survival, particularly in urban conditions shaped by city regulations that make microvending difficult for the poor. An analysis of 165 interviews conducted in two low-income neighborhoods in Dar es Salaam, Tanzania over 8 years demonstrates how interlocked layers of technology and interaction make mobile money services semiformal. I introduce two mobile money-enabled survival strategies: intrahousehold transfers for day-to-day survival (transfers within the same city) and resource safeguarding through kin remittances of start-up capital (home-based subsistence business capital stored for kin access in emergencies). The recent tightening of mobile phone regulations in the global South has disrupted users’ multilevel and formal/informal-hybrid infrastructures of money movement in these communities. Such tougher regulations could result in a new digital divide that hinders rather than facilitates the financial inclusion of the poor.

Testing the sharing rule in a collective model of discrete labor supply with Spanish data

ABSTRACTThis paper estimates a collective model of discrete labor supply, using data from the Spanish Survey of Household Finances. The model allows identifying a sharing rule of household income. Then, it is used unique information for unemployed wives about intrahousehold transfers to estimate its accuracy. Results show that husbands’ hours of work are conditional on wives’ decisions, which mainly depend on non-labour income. Despite data availability, predicted sharing rules fit the data qualitatively well, and are mainly driven by wives’ potential income. Husbands show low levels of altruism, and non-participation appears to be especially detrimental for wives with high potential income.

Social Distance Matters in Dictator Games: Evidence from 11 Mexican Villages

We examine the impact of social distance in dictator game giving. The study is conducted in a field setting with high stakes (two days’ wages). The sample is a representative sample from eleven low-income Mexican villages. Subjects make multiple dictator decisions simultaneously, in a comparative dictator game. We show the relationship between social distance and giving using several family members, a member of the same village, and a stranger from a different village. Dictator giving shows substantial variation across recipient types and varies directly with social distance. We find higher giving towards family members than towards community members and strangers. Furthermore, our results indicate that giving to community members and to strangers is not different. In light of our results, it is important to consider the impact of social distance on inter- and intra-household transfers in policy interventions that alleviate poverty, e.g., conditional transfers.

The Betrayed Generation? Intra-Household Transfers and Retirement Behavior in South Korea

We consider the nexus of intra-household transfers, the sex composition of the sibship, and parental retirement behavior in Korea. We provide evidence that the cost of raising sons is higher than it is for daughters in Korea. In the absence of sufficient transfers from adult sons to parents, this implies that parents will increase their labor supply to fund earlier investments in their sons. Consistent with this, we show that parents with more adult sons delay their retirements. In particular, an elderly parent with all sons has a retirement probability that is 7-10 percentage points lower than a comparable parent with all daughters. Elderly parents also work between 1.8-2.7 hours more per week when their sibship consists of all sons. These effects are the most pronounced when the first born is a son as well as for poorer households.

Changing the Rules Midway: The Impact of Granting Alimony Rights on Existing and Newly Formed Partnerships

The paper analyzes the effect of a reform granting alimony rights to cohabiting couples in Canada, exploiting the fact that each province extended these rights in different years and required different cohabitation length. A theoretical analysis, based on a collective household model with a matching framework, predicts that changes in alimony laws would affect existing couples and couples-to-be differently. For existing couples, legislative changes aimed at favoring (wo)men do benefit them, especially if the match quality is low. However, for couples not yet formed, they generate offsetting intra-household transfers (in our model, of leisure) and lower intra-marital allocations for the spouses who are the intended beneficiary. Our empirical analysis confirms these predictions. Among cohabiting couples united long enough before the reform, obtaining the right to petition for alimony led women to lower their labor force participation. These results, however, do not hold — and, in some cases, are reversed — for newly formed cohabiting couples.

Pro-elderly welfare states within pro-child societies: Incorporating family cash and time into intergenerational transfers analysis

Households and welfare states both serve as vehicles of lifecycle financing through intergenerational transfers. Working-age people are net contributors, children and the elderly are net beneficiaries. However, there is a marked asymmetry in the socialization of intergenerational transfers. Working-age people pay taxes and social security contributions to care for the elderly as a generation, but they individually spend cash and contribute time to raise their own children. This results in asymmetric visibility of intergenerational transfers. Resources flowing to the elderly are near-fully observed in National Accounts (NA), but inter- and intra-household transfers are not registered there. Using data for ten European countries representing 70% of the population of the EU, we employ National Transfer Accounts (NTA) to include private transfers as well. In addition, as an extension of NTA, we use National Time Transfer Accounts (NTTA) to quantify the value of time transferred within and between households in the form of unpaid labor. Only a fifth of all resource transfers to children is registered in NA; another third is made visible by NTA, but nearly half is made visible only by NTTA. Contrary to much perceived wisdom, once intra-familial transfers of cash and time are incorporated, European societies transfer more resources to children than to the elderly.

Noncooperative Household Consumption with Caring

We present a household consumption model that accounts for caring house- hold members, while allowing for noncooperative behavior in decisions on pub- lic goods. The intrahousehold consumption outcome critically depends on the degree of caring between the household members. By varying the degree of in- trahousehold caring, the model encompasses a whole continuum of household consumption models that are situated between the fully cooperative model and the noncooperative model without caring. This feature is used to define a measure for the degree of cooperation within the household. We also establish a dual characterization of our noncooperative model with caring preferences: we show that the model is dually equivalent to a noncooperative model with non-caring preferences that is characterized by intrahousehold transfers. Fi- nally, following a revealed preference approach, we derive testable implications of the model for empirical data. We demonstrate the practical usefulness of the model through an illustrative application.

Noncooperative Household Consumption with Caring

We present a household consumption model that accounts for caring household members, while allowing for noncooperative behavior in decisions on public goods. The intrahousehold consumption outcome critically depends on the degree of caring between the household members. By varying the degree of intrahousehold caring, the model encompasses a whole continuum of household consumption models that are situated between the fully cooperative model and the noncooperative model without caring. This feature is used to define a measure for the degree of cooperation within the household. We also establish a dual characterization of our noncooperative model with caring preferences: we show that the model is dually equivalent to a noncooperative model with non-caring preferences that is characterized by intrahousehold transfers. Finally, following a revealed preference approach, we derive testable implications of the model for empirical data. We show the practical usefulness of our model by an application to panel data on two-person household consumption drawn from the Russia Longitudinal Monitoring Survey. We find that the degree of cooperation varies considerably across couples. We relate this variation to observable household characteristics, and find that older couples are generally more cooperative. (This abstract was borrowed from another version of this item.)

Income Splitting and Gender Equality: The Case for Incentivizing Intra-Household Wealth Transfers

In all countries that use the individual as the basic unit of taxation, tax policy makers must contend with the problem of spousal income splitting and the dilemma it poses for gender equality. On the one hand income splitting opens a back door to joint taxation of couples, with its troubling labour market disincentives for second earners. Yet attempting to prevent this type of avoidance planning by ignoring inter-spousal transfers for tax purposes disrespects women’s individual agency over property to which they hold legal title, and may close off one source of economic power for those who do the bulk of unpaid work. This tax policy issue thus engages fundamental, normative debates about the meaning of gender equality and whether it is possible to enhance women’s access to markets while also valuing and compensating their unpaid contributions. The paper argues that a way through this dilemma is to differentiate between forms of income splitting that enhance the economic autonomy of a lower-earning spouse and those that entail no meaningful sharing of economic power but merely reduce tax for the transferor. While the former should be aggressively constrained, a gender-equality case can be made for more liberal treatment of genuine intra-household transfers, if combined with other measures that reduce the costs to second earners of entering paid labour. The paper criticizes recent Canadian reforms that expand the scope for notional income splitting, without demanding any real redistribution of underlying assets or income.

LIFECYCLE DEFICIT, INTERGENERATIONAL PUBLIC AND FAMILIAL SUPPORT SYSTEM IN INDIA

The old and young consume public and private goods and services in excess of their labour income and incur lifecycle deficit (LCD). The share of the benefits received by the elderly 65 years and above and children below 20 years are, respectively, 6.3 and 42.1 per cent of the total familial in-transfer. The elderly themselves contribute to support, particularly for education of grandchildren, and their contribution is more than the benefit they receive from intra-household transfers. Contrary to the belief that in India, children provide old-age security, the elderly do not gain from the intra-household familial support. It is found that in India, there is a shortage of public funding to meet a greater share of the LCD of the population of children and the aged, and they would not have been able to consume essential goods and services if not for asset-based consumption and familial support.

Demographic Change, Intergenerational Transfers, and the Challenges for Social Protection Systems in the People’s Republic of China

The transition in the People’s Republic of China from a centrally planned economy to a market-based economy is widely acclaimed for leading to unprecedented economic growth, but there is a growing awareness of the social strains accompanying that growth such as the lagging development of the social protection system as the population ages. Using estimates from the National Transfer Accounts database, we describe changes in life cycle public transfers; interhousehold transfers; and intrahousehold transfers for education, health care, and other support; and discuss the main challenges that demographic change poses for the pension and health care systems. Demographic change and its interaction with family behavior and social policies will strongly shape both future economic growth - through savings and investment decisions, labor supply and productivity - and the sustainability of social support systems.

Are Intra-Household Allocations Policy Neutral? Theory and Empirical Evidence

We develop a collective household model with spousal matching in which there exists marital gains to assortative matching and marriage quality for each couple is revealed ex post. Changes in alimony laws are shown to affect existing couples and couples-to-be differently. For existing couples, legislative changes that favor (wo)men benefit them especially if the marriage match quality is low, while, for couples not yet formed, they generate offsetting intra-household transfers and lower intra-marital allocations for the spouses who are the intended beneficiary. We then estimate the effect of granting alimony rights to cohabiting couples in Canada using a triple-difference framework since each province extended these rights in different years and requiring different cohabitation length. We find that obtaining the right to petition for alimony led women to lower their labor force participation. These results, however, do not hold – and, in some cases, are reversed – for newly formed cohabiting couples.

Noncooperative Household Consumption with Caring

We present a household consumption model that accounts for caring household members, while allowing for noncooperative behavior in decisions on public goods. The intrahousehold consumption outcome critically depends on the degree of caring between the household members. By varying the degree of intrahousehold caring, the model encompasses a whole continuum of household consumption models that are situated between the fully cooperative model and the noncooperative model without caring. This feature is used to define a measure for the degree of cooperation within the household. We also establish a dual characterization of our noncooperative model with caring preferences: we show that the model is dually equivalent to a noncooperative model with non-caring preferences that is characterized by intrahousehold transfers. Finally, following a revealed preference approach, we derive testable implications of the model for empirical data. We demonstrate the practical usefulness of the model through an illustrative application.

Remesas, género y desarrollo. Evidencia de una muestra de emigrantes en el país de destino

Altruism is a powerful motivation to understand intra-household transfers. However, it is likely that migrants conceive other type of contractual motivations to help their relatives through remittances. In this work a new survey to immigrants born in Ecuador and residing in Spain is analyzed. The goal of the paper is to test the role played by the gender in what motivates the migrant to remit. With the empirical specification, the contractual versus de altruistic model is tested. Results achieved show that individuals, in general, behave under the contractual model, although female migrants present more altruistic features than male migrants. JEL Classification: D64, J16, J61, F22, O15.

An Assignment Model with Divorce and Remarriage

We develop a two-sided matching model with positive sorting. Match quality for each couple is revealed ex post and those with poor draws divorce. We show that full commitment and Nash bargaining mechanisms both yield the same non-contingent intra-household allocations. We then apply our framework to an analysis of changes in divorce settlement laws. Changes in laws governing property division in divorce can have temporary effects in their desired direction, but whether or not their longer term impact can be undone in the markets for marriage depends on commitment and the timing of marriage vis-a-vis the legislative policy change. In particular, we find that, if existing couples were able to commit to their allocations prior to marriage, legislative changes that favor a spouse yield their intended benefits only among the poorquality matches. But if existing couples were not able to make pre-marital allocative commitments, then changes in property division rules in divorce impact all couples and generate marital gains for all of the intended beneficiaries. For individuals not yet married, in contrast, changes in property division rules generate offsetting intra-household transfers and lower intra-marital allocations for all future spouses who are the intended beneficiaries.

Norms of reciprocity and human capital formation in a poor patriarchal household

Abstract If gifts are reciprocated in the future, intra-household distribution of resources will depend on premarital gifts such as dowry, bride-price and parents’ gifts to a child such as schooling and nurturing. If such social norms of reciprocity exist, parental income effects on their child's human capital will be asymmetric, and the effect will depend on the amount of intra-household transfers made before childbirth.

The Gender Impact of Pension Reform: And Which Policies Shape This Impact

Pension systems may have a different impact on the two genders because women are less likely than men to work in formal labor markets and earn lower wages when they do. Recent multi-pillar pension reforms tighten the link between payroll contributions and benefits, leading critics to argue that they will hurt women. In contrast, supporters of these reforms argue that women will be helped by the removal of distortions that favored men and the better targeted redistributions in the new systems. In order to test these conflicting claims and to analyze more generally the gender impact of alternative pension systems, this paper examines the differential impact of the new and old systems in three Latin American countries - Chile, Argentina and Mexico. Based on household survey data, we simulate the wage and employment histories of representative men and women, the pensions that these are likely to generate under the new and old rules, and the relative gains or losses of the two genders due to the reform. We find that women do indeed accumulate private annuities that are only 30-40% those of men in the new systems. However, this effect is mitigated by sharp targeting of the new public pillars toward low earners, many of whom are women, and by restrictions on payouts from the private pillars, particularly joint annuity requirements. As a result of these transfers, total lifetime retirement benefits for women reach 60-80% of those for men and for full career married women they equal or exceed benefits of men. Also as a result, women are the biggest gainers from the pension reform. For women who receive these transfers, female/male ratios of lifetime benefits in the new systems exceed those in the old systems in all three countries. Private intra-household transfers from husband to wife in the form of joint annuities play the largest role. Women who work no longer have to give up their own annuity to get this widows' benefit, as they did in some old systems.

Do Husbands Matter? Married Women Entering Self-Employment

This paper investigates the effect of a husband's self-employment experience on the probability that his wife will enter self-employment. Results suggest that having a husband with some exposure to self-employment nearly doubles the probability that a woman will become self-employed, all else equal. Further, the effect is found to be strongest if a woman's husband is actually self-employed at the time she is contemplating a transition. Having a husband with prior self-employment experience also has an important yet quantitatively smaller effect. A series of robustness checks suggest that family businesses and assortative mating only partially explain this large effect. Intrahousehold transfers of human (and, to a much lesser degree, financial) capital might also play a role.