Journal
JOURNAL OF ECONOMIC BEHAVIOR & ORGANIZATION
Volume 155, Issue -, Pages 79-98Publisher
ELSEVIER
DOI: 10.1016/j.jebo.2018.08.011
Keywords
Gift Competition; Reciprocity; Subjective well-being; Inequality
Categories
Funding
- National Science Fund of China (NSFC) [70525003, 70828002]
- Center Overseas Research Grant in Tilburg University
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In many developing countries, gift expenses escalate with income growth and account for a substantial share of household expenditure. We develop a theoretical model to demonstrate how (unequal) income growth may trigger gift competition and drive up the financial burden associated with gift exchange. We use unique census-type panel data from rural China to test our model predictions and demonstrate that (1) the value of gifts responds to the average gift in the community, (2) the escalation of gift giving may have adverse welfare implications (especially for the poor), and (3) escalating gift expenses crowd out expenditures on other consumption items. (C) 2018 Elsevier B.V. All rights reserved.
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