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International Charity: For the Poor?

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  • Kilkenny, Maureen
  • Calmette, M.

Abstract

We show how international charity leads to reduced self-help, exacerbated internal income inequality, and less charity for needy countries when international funds transfer is costly and there are information asymmetries. Mechanism design techniques are used to analyze international income transfer programs in the context of moral hazard, principal-agent, and adverse selection problems. We show that the burden of information asymmetry is borne by the most needy even when charities design incentive contracts which limit informational rents.

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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 5102.

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Date of creation: 01 Jul 2002
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Publication status: Published in Economic Inquiry, July 2002, vol. 40 no. 3, pp. 497-507
Handle: RePEc:isu:genres:5102

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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Web page: http://www.econ.iastate.edu
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