() and Sten Nyberg
Assar Lindbeck: The Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden, and Institute for International Economic Research (IIES), Stockholm University, SE-106 91 Stockholm, Sweden
Sten Nyberg: Department of Economics, Postal: SE-106 91 Stockholm, Sweden
Abstract: Children who can count on support from altruistic parents may not try hard to succeed in the labor market. Moreover, parental altruism makes withdrawal of such support non-credible. To promote work effort, parents may want to instill norms which later cause their children to experience guilt or shame associated with failure to support themselves. While social insurance pools risk across families, we show that it also creates a free-rider problem among parents in terms of norm formation. We also examine the formation of norms requiring children to support their parents financially in old age.
37 pages, May 2, 2001
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