Economic development and family structure: From pater familias to the nuclear family

Abstract

We provide a theory that is able to account for the observed comovement between the shift in intergenerational living arrangements from coresidence to non-coresidence and economic development. Our theory is consistent with the diminution in the status of the elderly documented by some sociologists. The results from our analysis show that, when technical progress is fast enough, the economy experiences a shift from stagnation to growth, there is a transition from coresidence to non-coresidence, and the social status of the elderly tends to deteriorate.

Agriculture to industry: The end of intergenerational coresidence

“…See for instance Alvarez-Cuadrado and Poschke (2011)Doepke (2004),Gollin et al (2002),Harris and Todaro (1970),Hansen and Prescott (2002),Harris and Todaro (1970),Kuznets (1966),Lewis (1954),Nurkse (1953),Rostow (1960).4 See for instanceCosta (1997),McGarry and Schoeni (2000), among others. 5Aquilino (1990),Pensieroso and Sommacal (2014),Ruggles (2007),Ward et al (1992),Whittington and Peters (1996), to mention but a few Bethencourt and Rios-Rull (2009). provide a theory compatible with both the affluence and the economic development hypotheses.…”

“…The functional distribution of income changes: the wage earned by the young increases, while the rent earned by the old decreases. We assume collective bargaining among family members in case of coresidence, as in Pensieroso and Sommacal (2014). Accordingly, coresidence is deeply influenced by the relative income of the young with respect to the old, which coincides here with the functional distribution of income.…”

“…As explained in Pensieroso and Sommacal (2014), the two perspectives can be viewed as complementary rather than alternative, and the pre-eminence of one over the other mainly depends on the period under exam. In particular, the economic development hypothesis seems more relevant for the period before WWII, while the affluence hypothesis for the period after the 1950s.…”

“…As we do not model Social Security in the United States, the economic development hypothesis looks more compelling for our analysis. Accordingly, we use the model by Pensieroso and Sommacal (2014), who propose a general equilibrium theory of the economic development hypothesis in a secular perspective.…”

“…The coresidence decision is modeled as inPensieroso and Sommacal (2014).10 We assume that x is produced using a linear technology x = ZY x , where Y x are the units of the final good Y used in the production of x. In equilibrium, Z = 1 p .…”