An Incentive Model of the Effect of Parental Income on Children
Economists explain the positive relationship between parental income and children's outcomes using an investment model. Building on work in psychology and sociology, this paper emphasizes the importance of child-rearing practices, which vary with income. I argue that parents' ability to mold their children's behavior through pecuniary incentives is limited at low incomes, leading to lower outcomes and increased reliance on nonpecuniary mechanisms such as corporal punishment. My model generates a positive relationship between parental income and children's outcomes especially at low incomes and endogenously produces a relationship between parental income and child-rearing practices. Empirical work confirms these implications.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chwe, Michael Suk-Young, 1990. "Why Were Workers Whipped? Pain in a Principal-Agent Model," Economic Journal, Royal Economic Society, vol. 100(403), pages 1109-1121, December.
When requesting a correction, please mention this item's handle: RePEc:ucp:jpolec:v:109:y:2001:i:2:p:266-280. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division)
If references are entirely missing, you can add them using this form.