The economic consequences of mutual help in extended families

Jean-Marie Baland, Isabelle Bonjean, Catherine Guirkinger, Roberta Ziparo

Research output: Contribution to journalArticlepeer-review


In the absence of well-developed markets for credit and insurance, extended families play a major role as a traditional system of mutual help. However these arrangements have important consequences on economic choices. In this paper, we use first hand data from Western Cameroon to explore this question. We find that the large majority of transfers follow a given pattern whereby elder siblings support their younger siblings in the early stages of their lives who in turn reciprocate by supporting their elder siblings when they have children. We interpret this pattern as a generalised system of reciprocal credit within the extended family. We propose a simple overlapping generation model to investigate its welfare properties. We then explore the implications of this pattern on labour market outcomes and find evidence of large disincentive effects. This pattern of transfers also implies that younger siblings are more educated but have fewer and less educated children.

Original languageEnglish
Pages (from-to)38-56
Number of pages19
JournalJournal of Development Economics
Publication statusPublished - 1 Nov 2016


  • Africa
  • Extended families
  • Mutual help
  • Solidarity
  • Transfers


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