Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/72264
Authors: 
Cox, Donald
Stark, Oded
Year of Publication: 
2004
Series/Report no.: 
Reihe Ökonomie / Economics Series, Institut für Höhere Studien (IHS) 158
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 that such 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.
Subjects: 
intergenerational transfers
the demonstration effect
inculcating values in children
subsidizing the production of grandchildren
housing downpayments
JEL: 
A14
D10
I30
J13
J14
Document Type: 
Working Paper

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