On the Demand for Grandchildren: Tied Transfers and the Demonstration Effect

Cox, Donald and Stark, Oded (May 2004) On the Demand for Grandchildren: Tied Transfers and the Demonstration Effect. IHS Economics Series 158

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Abstract: Most private giving between living generations takes the form of "tied" transfers, such as help with housing downpayments. We argue that parents provide help with downpayments in order to encourage the production of grandchildren, and thatsuch a subsidization emanates from the "demonstration effect:" a child's propensity to furnish parents with attention and care can be conditioned by parental example. Parents who desire such transfers in the future have an incentive to make transfers to their own parents in order to instill appropriate preferences in their children. This generates a derived demand for grandchildren since potential grandparents will be treated better by their adult children if the latter have their own children to whom to demonstrate the appropriate behavior. Empirical work, based on waves 1 and 2 of the National Survey of Families and Households, indicates behavior consistent with subsidization of the production of grandchildren and the demonstration effect.;

Item Type: IHS Series
Keywords: 'Intergenerational transfers' 'The demonstration effect' 'Inculcating values in children' 'Subsidizing the production of grandchildren' 'Housing downpayments'
Classification Codes (e.g. JEL): A14, D10, I30, J13, J14
Status: Published
Date Deposited: 26 Sep 2014 10:38
Last Modified: 22 Jul 2017 07:05
URI: http://irihs.ihs.ac.at/id/eprint/1575

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