Family Versus Public Solidarity: Theory and Experiment

W. Güth, M. Sutter, H.A.A. Verbon, H. Weck-Hannemann

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Abstract

We present an overlapping generations model with two families who can guarantee old age support either by intra-family transfers from child to parent or via a tax-financed public pension system encompassing both families.We derive the individually and family-specific optimal decisions and present some more behavioristic hypotheses.Our experimental observations allow conclusions on (1) whether raising taxes crowds out voluntary transfers, (2) how income distributions influence family and public solidarity, and (3) whether participants prefer more to less public solidarity.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages38
Volume2001-86
Publication statusPublished - 2001

Publication series

NameCentER Discussion Paper
Volume2001-86

Keywords

  • voting
  • pensions
  • families
  • overlapping generations

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