Discussion Paper No.1201

Title:Effects of Public Pensions on Residential Choice and Welfare in the Family
Authors:Kimiyoshi Kamada,and Takashi Sato

Abstract:We examine the effects of public pensions on the residential choice of a child, who is altruistic, and provides aged parents with attention as well as financial support in two ways: income transfers and contribution to family public goods. We find that, even if the child lives with parents in the same home under a certain level of public pensions, the child eventually chooses to move away from the parents as the level of public pension rises. When the child moves, both the parents' and child's welfare may decrease. Nevertheless, the optimal level of public pensions is positive under reasonable parameter values in the social welfare function.

JEL: H41, H55, J10