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A Theory of Educational Inequality Family and Agency Costs

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Author Info
Jellal, Mohamed

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Abstract

In this paper, we examine the consequences of imperfect information on the pattern of transfers from parents to children. Drawing on the theory of mechanism design, we consider a model of family contract with two levels of effort. We prove that equal transfers among children are expected under perfect information, while the second-best contract implies risksharing between the two generations, so that poor families experience higher agency costs..

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File URL: http://mpra.ub.uni-muenchen.de/17434/
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 17434.

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Date of creation: 21 Sep 2009
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Handle: RePEc:pra:mprapa:17434

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Related research
Keywords: Education; Asymmetric Information; Family Financial Incentives; Inequality;

Find related papers by JEL classification:
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
J1 - Labor and Demographic Economics - - Demographic Economics
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
A2 - General Economics and Teaching - - Economic Education and Teaching of Economics
D1 - Microeconomics - - Household Behavior

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    Other versions:
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  12. Lundholm, M. & Ohlsson, H., 1999. "Post Mortem Reputation, Compensatory Gifts and Equal Bequests," Papers 1999:3, Uppsala - Working Paper Series.
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  16. Chami, Ralph, 1998. "Private Income Transfers and Market Incentives," Economica, London School of Economics and Political Science, vol. 65(260), pages 557-80, November. [Downloadable!] (restricted)
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  19. McGarry, Kathleen, 1999. "Inter vivos transfers and intended bequests," Journal of Public Economics, Elsevier, vol. 73(3), pages 321-351, September. [Downloadable!] (restricted)
  20. Eli Feinerman & Edward J. Seiler, 2002. "Private transfers with incomplete information: A contribution to the "altruism-exchange motivation for transfers" debate," Journal of Population Economics, Springer, vol. 15(4), pages 715-736. [Downloadable!] (restricted)
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  22. Chami, Ralph, 1996. "King Lear's dilemma: Precommitment versus the last word," Economics Letters, Elsevier, vol. 52(2), pages 171-176, August. [Downloadable!] (restricted)
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