Inter-generational transfers and bargaining power within the family in South Korea

My dissertation extends the literature on intergenerational transfers between adult married children and their parents in two ways. First, for a given couple, both sets of parents enter the optimization problem. Second, I develop and estimate models where amount of transfers to the husband's (wife's) parents is assumed to depend on the couple's income, the husband's parents' income, the wife's parent's income, and the bargaining power of husband (wife) within the family. Transfers from adult children to parents are quite important in developing countries; for example in Korea in 1995 they made up approximately 60% of the income of those over 60. Further, I argue that it is plausible that each spouse cares more about their parents than their in-laws, and thus such transfers are a form of semi-private consumption, and some have argued that observable semi-private consumption is very useful for looking at bargaining power within the family.;In Chapter 1 I consider two models for these transfers. I derive a static collective model to explain couple's joint decision on these transfers to both sets of parents and estimate this model on data from Korea (2001-2005). These models consider two-way transfers. The first model allows for bargaining between husband and wife, and between each spouse and their parents. To obtain tractable estimating equations I assume that the couple is myopic in the sense that they do not consider potential transfers from parents when dividing their household income. The second model is a dynastic collective model involving the couple and both sets of parents. I find that the data supports the first model but not the second, and I find that I cannot reject equal bargaining power hypothesis between husbands and wives.;In second Chapter I consider two models for intergenerational transfers and estimate structural parameters in the models. In the first model I derive a static collective model to explain couple's joint decision on these transfers to both sets of parents. The estimation of this model takes into account that the functional form of the transfer to one set of parents will change if the optimal transfer to the other set of parents is zero. I find that husbands and wives have equal bargaining power in South Korea. The second model extends the first model to allow the couple to be forward looking in the sense that they take potential transfers from parents into account when deriving their sharing rule; this extension comes at the cost of greatly increasing the complexity of the estimation procedure. Using this model I estimate that husbands and wives have equal bargaining power. Overall the results suggest that the husband's preferences and the wife's preferences have equal weight. Lastly, I investigate the role of education in determining bargaining power. I suggest that bargaining power is a function of third polynomial of relative education of spouses.