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Intermediation by aid agencies

Author

Listed:
  • Colin Rowat

    (University of Birmingham)

  • Paul Seabright

    (Id'EI, Toulouse)

Abstract

This paper models aid agencies as financial intermediaries that do not make a financial return to depositors, since the depositors' concern is to transfer resources to investor-beneficiaries. This leads to a significant problem of verification of the agencies' activities. One solution to this problem is for an agency to employ altruistic workers at below-market wages: workers can monitor the agency's activity more closely than donors, and altruistic workers would not work at below- market rates unless the agency were genuinely transferring resources to beneficiaries. We consider conditions for this solution to be incentive compatible.

Suggested Citation

  • Colin Rowat & Paul Seabright, 2004. "Intermediation by aid agencies," Industrial Organization 0412007, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpio:0412007
    Note: Type of Document - pdf; pages: 26. University of Birmingham, Department of Economics Working Paper, 04-22 (3 November 2004)
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/io/papers/0412/0412007.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Aldashev, Gani & Verdier, Thierry, 2010. "Goodwill bazaar: NGO competition and giving to development," Journal of Development Economics, Elsevier, vol. 91(1), pages 48-63, January.
    2. Vlassopoulos, Michael, 2007. "Volunteer hiring, organizational form and the provision of mission-oriented goods," Discussion Paper Series In Economics And Econometrics 707, Economics Division, School of Social Sciences, University of Southampton.
    3. Aubert, Cecile, 2006. "Work incentives and household insurance: Sequential contracting with altruistic individuals and moral hazard," Economics Letters, Elsevier, vol. 92(1), pages 82-88, July.
    4. Verdier, Thierry & Krautheim, Sebastian, 2012. "Globalization, Credence Goods and International Civil Society," CEPR Discussion Papers 9232, C.E.P.R. Discussion Papers.
    5. Krautheim, Sebastian & Verdier, Thierry, 2016. "Offshoring with endogenous NGO activism," Journal of International Economics, Elsevier, vol. 101(C), pages 22-41.
    6. Hudon, Marek & Traca, Daniel, 2011. "On the Efficiency Effects of Subsidies in Microfinance: An Empirical Inquiry," World Development, Elsevier, vol. 39(6), pages 966-973, June.
    7. Lore Wellens & Marc Jegers, 2017. "Beneficiaries’ participation in development organizations through local partners: A case study in Southern Africa," Development Policy Review, Overseas Development Institute, vol. 35, pages 196-213, October.
    8. Michael Vlassopoulos, 2017. "‘Putting a Foot in the Door’: Volunteer Hiring and Organizational Form," Manchester School, University of Manchester, vol. 85(2), pages 133-162, March.
    9. Ghatak, Maitreesh & Mueller, Hannes, 2011. "Thanks for nothing? Not-for-profits and motivated agents," Journal of Public Economics, Elsevier, vol. 95(1), pages 94-105.
    10. Verdier, Thierry & Aldashev, Gani, 2007. "NGO Competition and the Markets for Development Donations," CEPR Discussion Papers 6350, C.E.P.R. Discussion Papers.
    11. Burger, Ronelle & Owens, Trudy, 2010. "Promoting Transparency in the NGO Sector: Examining the Availability and Reliability of Self-Reported Data," World Development, Elsevier, vol. 38(9), pages 1263-1277, September.
    12. Aubert, Cécile & de Janvry, Alain & Sadoulet, Elisabeth, 2009. "Designing credit agent incentives to prevent mission drift in pro-poor microfinance institutions," Journal of Development Economics, Elsevier, vol. 90(1), pages 153-162, September.
    13. Ghosh, Suman & Van Tassel, Eric, 2011. "Microfinance and competition for external funding," Economics Letters, Elsevier, vol. 112(2), pages 168-170, August.
    14. Vlassopoulos, Michael, 2007. "Volunteer hiring, organizational form and the provision of mission-oriented goods," Discussion Paper Series In Economics And Econometrics 0707, Economics Division, School of Social Sciences, University of Southampton.
    15. Ghosh, Suman & Van Tassel, Eric, 2013. "Funding microfinance under asymmetric information," Journal of Development Economics, Elsevier, vol. 101(C), pages 8-15.
    16. repec:dau:papers:123456789/13655 is not listed on IDEAS

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    More about this item

    Keywords

    signalling; non-profit; wage differential; donations; altruism; two-sided market;
    All these keywords.

    JEL classification:

    • L - Industrial Organization

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