Informal Institutions and Intergenerational Contracts: Evidence from Schooling and Remittances in Rural Tanzania
This paper carries out a theoretical and empirical investigation of the role of informal institutions in facilitating intergenerational contracts governing investments in schooling and payments of pensions in the form of remittances. We show, using detailed household level data from rural Tanzania, that informal institutions of social control, rooted in tribal affiliations, determine both the household's investment in schooling and the probability that it receives remittances from migrants. This is consistent with a framework in which households' expected returns in the form of remittances, which is determined partly by the prospects of social control over migrants, influence current investments in schooling.
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