East Asia Workshop: Politics, Economy and Society

Dec 3 Workshop

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East Asia Workshop: Politics, Economy and Society Presents

Endogenous Altruism: Theory and Evidence from Chinese Twins

 

Junjian Yi

Post-doctoral Fellow, Department of Economics

University of Chicago

 

4:30-6pm, Tuesday

December 3, 2013

Pick Lounge, 5828 South University Ave.

 

Abstract
In this paper, I investigate the endogenous formation of inter-sibling altruism and its implications for intra-household investment in children’s human capital. The theoretical analysis shows that parental fostering of inter-sibling altruism during childhood serves as a device to ameliorate commitment constraints within families. The increase in inter-sibling altruism enhances total returns from intra-household investment in children’s human capital by allocating more resources to better-endowed children, and decreases inequality in the distribution of consumption among children via inter-sibling transfers. Theoretical predictions are supported by the empirical results that are based on the Chinese longitudinal child twin survey. I find that parents are more likely to educate their children to be altruistic toward one another when gaps in children’s prenatal endowments are larger. Given gaps in prenatal endowments, parents invest more in better-endowed children’s human capital when they educate their children to be more altruistic. When parents have more children, they educate children to be more altruistic. Hence, parental investment becomes more likely to reinforce gaps in children’s prenatal endowments in larger families. The empirical results suggest that the literature understates the degree of parental aversion to inequality among their children because of the omission of inter-sibling altruism.

 

 

Workshop website: http://cas.uchicago.edu/workshops/eastasia/

Student coordinator: Junyan Jiang (junyanjiang@uchicago.edu)

Faculty sponsors: Dali Yang, Dingxin Zhao and Zheng Michael Song

This presentation is sponsored by the Council on Advanced Studies in Humanities and Social Sciences, Center for East Asian Studies, and the Confucius Institute. Persons with disabilities who believe they may need assistance please contact the student coordinator in advance.

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