Does the Welfare State Destroy the Family?

Rafael Di Tella and Robert MacCulloch

Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: We analyze the relationship between the family and the Welfare State when intra-family transfers are governed by risk-sharing considerations (i.e. not by altruism). For the benchmarl case, the classic neutrality result is obtained: more generous unemployment benefits, provided by the State, crowd out family risk-sharing arrangements one-for-one. The model is extended to capture the idea that families have an advantage at monitoring the search activities of the unemployed, whereas the State has an advantage at enforcing risk-sharing contracts through taxation.

Keywords: FAMILY; SOCIAL WELFARE (search for similar items in EconPapers)
JEL-codes: J12 J13 H23 H53 (search for similar items in EconPapers)
Date: 1997
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Persistent link: http://EconPapers.repec.org/RePEc:oxf:wpaper:99195

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