The Economic Consequences of Mutual Help in Extended Families

52 Pages Posted: 27 Nov 2015

See all articles by Jean-Marie Baland

Jean-Marie Baland

University of Namur

Isabelle Bonjean

University of Namur

Catherine Guirkinger

University of Namur - Department of Economics

Roberta Ziparo

Aix-Marseille University

Date Written: November 2015

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

JEL Classification: D13, O1, O17

Suggested Citation

Baland, Jean-Marie and Bonjean, Isabelle and Guirkinger, Catherine and Ziparo, Roberta, The Economic Consequences of Mutual Help in Extended Families (November 2015). CEPR Discussion Paper No. DP10945, Available at SSRN: https://ssrn.com/abstract=2696136

Jean-Marie Baland (Contact Author)

University of Namur ( email )

8 rempart de la vierge
Namur, 5000
Belgium

Isabelle Bonjean

University of Namur ( email )

8 rempart de la vierge
Namur, 5000
Belgium

Catherine Guirkinger

University of Namur - Department of Economics ( email )

8 Rempart de la Vierge
Namur, 5000
Belgium

Roberta Ziparo

Aix-Marseille University ( email )

3 Avenue Robert Schuman
3 Avenue Robert Schuman,
Aix-en-Provence, 13628
France

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