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A Theory of Educational Inequality Family and Agency Costs

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  • Jellal, Mohamed

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..

Suggested Citation

  • Jellal, Mohamed, 2009. "A Theory of Educational Inequality Family and Agency Costs," MPRA Paper 17434, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:17434
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    References listed on IDEAS

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    More about this item

    Keywords

    Education; Asymmetric Information; Family Financial Incentives; Inequality;
    All these keywords.

    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; Mechanism Design
    • A2 - General Economics and Teaching - - Economic Education and Teaching of Economics
    • D1 - Microeconomics - - Household Behavior

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