The family as an economic unit

The Power of the Family

  

"The structure of family relationships influences economic behavior and attitudes. We define our measure of family ties using individual responses from the World Value Survey regarding the role of the family and the love and respect that children need to have for their parents for over 70 countries. We show that strong family ties imply more reliance on the family as an economic unit which provides goods and services and less on the market and on the government for social insurance. With strong family ties home production is higher, labor force participation of women and youngsters, and geographical mobility, lower. Families are larger (higher fertility and higher family size) with strong family ties, which is consistent with the idea of the family as an important economic unit. We present evidence on cross country regressions. To assess causality we look at the behavior of second generation immigrants in the US and we employ a variable based on the grammatical rule of pronoun drop as an instrument for family ties. Our results overall indicate a significant influence of the strength of family ties on economic outcomes"

The report  does not contain much by way of new revelations.Look at the Indian family system which speaks of the economic advantages of sticking together as a family unit .In India you still find joint families with a patriarchal head and the individual brothers and their families living together and doing business together.The family ties are very strong and besides the obvious economic advantages the family also takes care of the weaklings and the people who have retired and can no longer contribute to the income.The family system also takes care of unforeseen contingencies like death ,sickness, incapacitation etc.The most important use of the family is the pooling of skills that takes place in the family business.This is more applicable in the case of the Marwari bania families where a younger brother who is skilled in production automatically takes care of production while a brother who is better in liaison work and public relations takes up that work , the whole thing being an example of division of labour .

I can’t figure out what they mean by the grammatical rule of pronoun drop used to gauge the depth of the family ties.

http://www.nber.org/papers/w13051

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