Are Family Transfers Crowded Out by Public Tranfers?

W. Güth, T. Offerman, J.A.M. Potters, M. Strobel, H.A.A. Verbon

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Abstract

We give an account of an overlapping-generations experiment with multiple families in which voluntary transfers can take the form of support to the elderly or grants to children. Support to the old is a purely intergenerational (intra-family) transfer, whereas grants to children also involve an element of intra-generational (inter-family) redistribution through a compulsory pension system. Our data show that higher compulsory inter-family transfers lead subjects to place relatively more emphasis on support instead of grants: grants are crowded out, but support is not significantly affected. The efficiency of voluntary transfers increases, however. Furthermore, if subjects give transfers, they do not use tokens of direct reciprocity; evidence of indirect reciprocity in transfer behavior can only be obtained for the case where compulsory transfers are high.
Original languageEnglish
Pages (from-to)587-604
JournalScandinavian Journal of Economics
Volume104
Issue number4
DOIs
Publication statusPublished - 1 Jan 2002

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