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The economic consequences of mutual help in extended families

Jean-Marie Baland (), Isabelle Bonjean, Catherine Guirkinger and Roberta Ziparo ()

No 10945, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In the absence of well-developed markets for credit and insurance, extended families play a major role as a traditional systems of mutual help. However these arrangements have important consequences on economic choices. In this paper, we use first hand data from Western Cameroon to explore this question. We find that the large majority of transfers follow a given pattern whereby elder siblings support their younger siblings in the early stages of their lives who in turn reciprocate by supporting their elder siblings when they have children. We interpret this pattern as a generalized system of reciprocal credit within the extended family. We propose a simple overlapping generation model to investigate its welfare properties. We then explore the implications of this pattern on labour market outcomes and find evidence of large disincentive effects. This pattern of transfers also implies that younger siblings are more educated but have fewer and less educated children.

Keywords: cameroon; extended families; informal credit; redistribution (search for similar items in EconPapers)
JEL-codes: D13 O1 O17 (search for similar items in EconPapers)
Date: 2015-11
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Journal Article: The economic consequences of mutual help in extended families (2016) Downloads
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