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A Theory of Educational Inequality Family and Agency Costs

  • Jellal, Mohamed

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: https://mpra.ub.uni-muenchen.de/17434/1/MPRA_paper_17434.pdf
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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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  1. Gatti, Roberta, 2000. "Family altruism and incentives," Policy Research Working Paper Series 2505, The World Bank.
  2. Wolff François-Charles & Barnet-Verzat Christine, 2003. "Labor opportunities against family intergenerational exchange," Economics Bulletin, AccessEcon, vol. 10(1), pages 1-7.
  3. McGarry, Kathleen, 1999. "Inter vivos transfers and intended bequests," Journal of Public Economics, Elsevier, vol. 73(3), pages 321-351, September.
  4. Ana Fernandes, 2000. "Altruism with Endogenous Labor Supply," Econometric Society World Congress 2000 Contributed Papers 0844, Econometric Society.
  5. Barnet-Verzat, Christine & Wolff, Francois-Charles, 2002. "Motives for pocket money allowance and family incentives," Journal of Economic Psychology, Elsevier, vol. 23(3), pages 339-366, June.
  6. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  7. Cox, Donald, 1990. "Intergenerational Transfers and Liquidity Constraints," The Quarterly Journal of Economics, MIT Press, vol. 105(1), pages 187-217, February.
  8. Shleifer, Andrei & Summers, Lawrence H. & Bernheim, B. Douglas, 1986. "The Strategic Bequest Motive," Scholarly Articles 3721794, Harvard University Department of Economics.
  9. Assar Lindbeck & Sten Nyberg, 2001. "Raising Children to Work Hard: Altruism, Work Norms and Social Insurance," CESifo Working Paper Series 498, CESifo Group Munich.
  10. Cremer, H. & Pestieau, P., . "Bequests as a heir ``discipline device''," CORE Discussion Papers RP 1239, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Lundholm, Michael & Ohlsson, Henry, 1999. "Post Mortem Reputation, Compensatory Gifts and Equal Bequests," Working Paper Series 1999:3, Uppsala University, Department of Economics.
  12. Mohamed Jellal & FranÁois-Charles Wolff, 2003. "Leaving Home as a Self-selection Device," Economica, London School of Economics and Political Science, vol. 70(279), pages 423-438, 08.
  13. Ernesto Villanueva, 2003. "Parental altruism under imperfect information: theory and evidence," Working Papers 19, Barcelona Graduate School of Economics.
  14. Furnham, Adrian, 1999. "The saving and spending habits of young people," Journal of Economic Psychology, Elsevier, vol. 20(6), pages 677-697, December.
  15. Bisin, Alberto & Verdier, Thierry, 2001. "The Economics of Cultural Transmission and the Dynamics of Preferences," Journal of Economic Theory, Elsevier, vol. 97(2), pages 298-319, April.
  16. Lam, D. & Schoeni, R.F., 1993. "Private Interhousehold Transfers of Money and Time: New Empirical Evidence," Papers 93-26, RAND - Labor and Population Program.
  17. Ermisch, John & Di Salvo, Pamela, 1997. "The Economic Determinants of Young People's Household Formation," Economica, London School of Economics and Political Science, vol. 64(256), pages 627-44, November.
  18. Bruce A. Weinberg, 2001. "An Incentive Model of the Effect of Parental Income on Children," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 266-280, April.
  19. Wolff, Francois-Charles, 2006. "Microeconomic models of family transfers," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
  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.
  21. Chami, Ralph, 1998. "Private Income Transfers and Market Incentives," Economica, London School of Economics and Political Science, vol. 65(260), pages 557-80, November.
  22. Luc Arrondel & André Masson, 2002. "Altruism, Exchange or Indirect Reciprocity: What do the Data on Family Transfers Show?," DELTA Working Papers 2002-18, DELTA (Ecole normale supérieure).
  23. Wilhelm, Mark O, 1996. "Bequest Behavior and the Effect of Heirs' Earnings: Testing the Altruistic Model of Bequests," American Economic Review, American Economic Association, vol. 86(4), pages 874-92, September.
  24. Furnham, Adrian, 2001. "Parental attitudes to pocket money/allowances for children," Journal of Economic Psychology, Elsevier, vol. 22(3), pages 397-422, June.
  25. Chami, Ralph, 1996. "King Lear's dilemma: Precommitment versus the last word," Economics Letters, Elsevier, vol. 52(2), pages 171-176, August.
  26. repec:ebl:ecbull:v:10:y:2003:i:1:p:1-7 is not listed on IDEAS
  27. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
  28. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
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