Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25953
Authors: 
Pezzin, Liliana E.
Pollak, Robert A.
Schone, Barbara S.
Year of Publication: 
2007
Series/Report no.: 
CESifo working paper 1908
Abstract: 
In this paper, we use a two-stage bargaining model to analyze the living arrangement of a disabled elderly parent and the assistance provided to the parent by her adult children. The first stage determines the living arrangement: the parent can live in a nursing home, live alone in the community, or live with any child who has invited coresidence. The second stage determines the assistance provided by each child in the family. Working by backward induction, we first calculate the level of assistance that each child would provide to the parent in each possible living arrangement. Using these calculations, we then analyze the living arrangement that would emerge from the first stage game. A key assumption of our model is that family members cannot or will not make binding agreements at the first stage regarding transfers at the second stage. Because coresidence is likely to reduce the bargaining power of the coresident child relative to her siblings, coresidence may fail to emerge as the equilibrium living arrangement even when it is Pareto efficient. That is, the outcome of the two-stage game need not be Pareto efficient.
JEL: 
D1
J1
J2
Document Type: 
Working Paper

Files in This Item:
File
Size
189.11 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.