Original Paper

Journal of Population Economics

, Volume 28, Issue 1, pp 173-194

First online:

Endogenous division rules as a family constitution: strategic altruistic transfers and sibling competition

  • Yang-Ming ChangAffiliated withDepartment of Economics, Kansas State University Email author 
  • , Zijun LuoAffiliated withDepartment of Economics, Colgate University

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Based on the notions of parental altruism, sibling competition, and family constitution, we present a self-enforcing model where heterogeneous children have economic incentives to supply family-specific merit goods (e.g., companionship) to their parents for securing inheritable wealth and the altruistic parents decide on division rules according to an optimizing behavior. In our analysis of intergenerational cooperation and intragenerational competition, the altruistic parents care about the efficiency of the children-provided merit goods and the equity of the children’s incomes. For an optimal allocation of wealth, the parents strategically partition it into two pools: one to be distributed equally whereas the other unequally according to their children’s supply of merit goods. We look at motivation of the parents in allocating their wealth to the two different pools. The analysis of endogenous division rules has implications for the compatibility between equal postmortem transfers and unequal inter vivos gifts, both of which are consistent with parental altruism.


Parental altruism Endogenous division rules Sibling competition Family constitution

JEL Classifications

D1 D6 C7