Marital transfer and intra-household allocation: A Nash-bargaining analysis

Abstract

This paper explores the implications of inter-generational marital transfers on the allocation of resources within a conjugal household. Adopting a Nash-bargaining framework with alternative models of the threat points, it is argued that parents have greater incentive to make transfers to a married child than to a single child because of the efficiency gains from joint consumption and production of family public goods and because of the increase in bargaining power of the child in the allocation of private consumption. Such transfers also enhance marital stability by increasing the efficiency gains from marriage. © 2002 Elsevier Science B.V. All rights reserved.