Intermediation by aid agencies
AbstractThis Paper models aid agencies as financial intermediaries that do not make a financial return to depositors, since the depositors' concern is to transfer resources to investor-beneficiaries. This leads to a significant problem of verification of the agencies' activities. One solution to this problem is for an agency to employ altruistic workers at below-market wages: workers can monitor the agency's activity more closely than donors, and altruistic workers would not work at below-market rates unless the agency were genuinely transferring resources to beneficiaries. We consider conditions for this solution to be incentive compatible.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Development Economics.
Volume (Year): 79 (2006)
Issue (Month): 2 (April)
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Web page: http://www.elsevier.com/locate/devec
Other versions of this item:
- Colin Rowat and Paul Seabright, 2005. "Intermediation by aid agencies," Discussion Papers 05-16, Department of Economics, University of Birmingham.
- Colin Rowat & Paul Seabright, 2004. "Intermediation by aid agencies," Industrial Organization 0412007, EconWPA.
- Rowat, Colin & Seabright, Paul, 2004. "Intermediation by Aid Agencies," CEPR Discussion Papers 4781, C.E.P.R. Discussion Papers.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs
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