Altruism with Endogenous Labor Supply

Ana Fernandes

Working Papers from Centro de Estudios Monetarios Y Financieros-

Abstract: This paper proposes a model of altruism with endogenous labor supply. A full characterization of the family's choices of consumption and leisure is provided. Initially, work effort is assumed to be publicly observed; this assumption is later relaxed, allowing for privately observed actions. It is shown that the ``redistributive neutrality'' property commonly associated with altruism holds only with respect to non-labor income sources. Failing to control for labor income amounts to an inadequate specification of empirical tests of the neutrality hypothesis. Further, when effort is privately observed, the need to convey incentives causes neutrality to break down entirely.

Keywords: ALTRUISM; ASYMETRIC INFORMATION; LABOUR MARKET (search for similar items in EconPapers)
JEL-codes: D13 D82 J22 (search for similar items in EconPapers)
Date: 2000
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